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On the Deadweight Cost of Production Requirements for Geographically Differentiated Agricultural Products

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  • Pierre R. Mérel

Abstract

This article investigates the welfare effects of alternate producer collusion schemes in a context where collusion is authorized in order to cover fixed costs. Using a linear equilibrium displacement model, we find evidence that, when the producer group is allowed to control quota levels, an input quota policy entails a smaller absolute deadweight loss than an output quota policy. This finding suggests that if producer groups are allowed to resort to production-distorting instruments to limit output, they will make production choices that are less costly for society than if they had been allowed to directly control output levels. Copyright 2008, Oxford University Press.

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  • Pierre R. Mérel, 2008. "On the Deadweight Cost of Production Requirements for Geographically Differentiated Agricultural Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(3), pages 642-655.
    • Handle: RePEc:oup:ajagec:v:91:y:2008:i:3:p:642-655
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2009.01272.x
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    References listed on IDEAS

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    1. Sergio H. Lence & Stéphan Marette & Dermot J. Hayes & William Foster, 2007. "Collective Marketing Arrangements for Geographically Differentiated Agricultural Products: Welfare Impacts and Policy Implications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 947-963.
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    4. Daniel Pick, 2008. "Geographical Indications and the Competitive Provision of Quality in Agricultural Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(3), pages 794-812.
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    6. Stéphan Marette & John Crespi, 2003. "Can Quality Certification Lead to Stable Cartels?," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 23(1), pages 43-64, August.
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    Cited by:

    1. Tauber, Ramona & Anders, Sven M. & Langinier, Corinne, 2011. "The Economics of Geographical Indications: Welfare Implications," Working Papers 103262, Structure and Performance of Agriculture and Agri-products Industry (SPAA).
    2. Pierre Mérel & Richard J. Sexton, 2012. "Will geographical indications supply excessive quality?," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 39(4), pages 567-587, September.
    3. Teuber, Ramona, 2011. "Protecting Geographical Indications: Lessons learned from the Economic Literature," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 116081, European Association of Agricultural Economists.

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