Abstract
We apply a spatial price equilibrium model of the world sugar market to simulate an abolition of the European Union (EU) quota system in 2015/16. To overcome the normative nature of the approach, we calibrate the model by attaching a non-linear cost term to each trade flow. This is in some regards similar to positive mathematical programming. We suggest an economic interpretation and an econometric specification of the cost term. EU sugar production is simulated to increase from 13.3 to 15.5 million tons in case of quota abolition by 2019/20. Ten member states increase production, nine reduce it. Preferential imports are significantly reduced. Simulated effects are found to be more pronounced the higher the world market price.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
