Trade and welfare effects of various market policies and developments in the European Economic Community: An investigation of the European market for apples and pears

Abstract

To investigate the trade and welfare consequences of specific market policies and economic developments in the European market for apples and pears, a spatial price equilibrium model is formulated and applied. For the evaluation of the welfare consequences of certain policies, the concept of economic surplus is used. The empirical analysis shows that there are still severe data deficiencies which limit the application of such models for decision-making. Nevertheless, it appears to be appropriate to conclude from our calculations that withdrawals of apples and pears can be considered as a valuable instrument, if only used as a temporary measure, to stabilize markets. Further results suggest that the extension of the EEC is not only of advantage to consumers in the newly integrated countries but that it also leads to substantially increasing incomes in the main production areas for apples and pears in Europe.