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Two‐Tier Pricing For Milk: A Re‐Examination

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  • L. J. Hubbard

Abstract

Principal objections to two‐tier pricing have centred on administrative complexities and the ‘transparent’ nature of its cost. However, the credibility of two‐tier pricing for milk within the European Community is now enhanced by the existence of a quota scheme and by recent levels of budgetary expenditure. Potential features of two‐tier pricing are that farm support can be more readily directed at selected recipients and that lowering of market prices for milk relieves consumers from some of the burden of this support. A major attraction is that the existing quota system allows for an immediate ready‐made transition. In this paper, two applications are developed. Both allow varying combinations of quota level and support price, but differ in their impact on producers' incomes. Some degree of national flexibility within the Community is also explored.

Suggested Citation

  • L. J. Hubbard, 1992. "Two‐Tier Pricing For Milk: A Re‐Examination," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(3), pages 343-354, September.
    • Handle: RePEc:bla:jageco:v:43:y:1992:i:3:p:343-354
    DOI: 10.1111/j.1477-9552.1992.tb00230.x
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    Cited by:

    1. Zohra Bouamra‐Mechemache & Jean‐Paul Chavas & Tom Cox & Vincent Réquillart, 2002. "EU Dairy Policy Reform and Future WTO Negotiations: a Spatial Equilibrium Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 233-257, July.
    2. Lopez, Rigoberto A. & Altobello, Marilyn A. & Shah, Farhed A., 1994. "Amenity Benefits and Public Policy: An Application to the Connecticut Dairy Sector," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(2), pages 485-496, December.
    3. Bouamra-Mechemache, Z. & Chavas, J.P. & Cox, T. & Réquillart, V., 2001. "Price discrimination and EU dairy policy : an economic evaluation of policy options," Economics Working Paper Archive (Toulouse) 23, French Institute for Agronomy Research (INRA), Economics Laboratory in Toulouse (ESR Toulouse).

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