Burrell argues that our welfare evaluations of alternative policy options considered by the European Community (EC) for the Common Agricultural Policy (CAP) fail to recognize policy-induced shifts in the supply curve. Burrell concludes that our approach is therefore incapable of yielding a determinate ranking and hence invalidates our policy recommendations. Although we analyzed four policy mechanisms and showed both theoretically and empirically that a production quota, under some circumstances, is inferior to a two-price plan, Burrell determines unequivocably that a quota is an inferior instrument. Her conclusion is based on several arguments. First, nontransferable quotas induce economic inefficiency. This is true; but at no time in our original paper did we recommend that quotas, or any of the other three instruments for that matter, be implemented in an inefficient manner. We assumed transferable quotas. A comprehensive evaluation of alternative implementation methods for each of the four policy instruments was beyond the scope of our paper. Nevertheless, we question Burrell's assertion that quotas will necessarily be implemented in a more inefficient manner than, for example, a two-price plan. To motivate the problem, consider Canada's production quota scheme for milk and compare it to the two-price plan used in the United States. Nontransferability of quotas between provinces in Canada induces deadweight costs additional to those calculated in our paper. Similar costs are also incurred currently in the EC with nontransferable milk quotas between countries.' However, Class I minimum prices in the United States are set in relation to Eau Claire, Wisconsin, so that the most deficit region in the United States is selfsufficient in milk production. This induces additional social resource costs resulting from distorted regional production patterns akin to those induced by nontransferable quotas in Canada and the EC (Public Hearing on Federal Milk Marketing Orders).2 Indeed, the U.S. two-price plan has another inefficiency associated with it: farmers' production decisions are determined by the blend price rather than the lower Class II price. These inefficiencies of the U.S. program may well induce more additional social costs than a nontransferable quota scheme.3 Interestingly, a production quota scheme superimposed on a two-price plan can improve efficiency. The United Dairymen of Arizona, representing all dairy farmers in Arizona, unilaterally instituted production quotas for Class I milk in the 1970s (de Gorter and Schmitz). Any milk produced in excess of this quota received the Class II price. This effectively eliminated the blend pricing scheme facing Arizona's farmers and hence reduced output. Because the federal government of the United States fixes the Class I and II prices to consumers, the latter's welfare was unaffected. The welfare of Arizona farmers increased