An allais measure of production sector waste due to quotas

Lilyan E. Fulginiti; Richard K. Perrin

doi:10.2307/1243809

An allais measure of production sector waste due to quotas

Lilyan E. Fulginiti, Richard K. Perrin

Daugherty Water for Food Global Institute

Research output: Contribution to journal › Article › peer-review

1 Scopus citations

Abstract

In this paper we adapt a partial equilibrium approach of Allais and Diewert to measure the efficiency loss in the producing sector due to quotas. The measure of waste is the additional profits available by reallocation subject to constraints that the welfare of persons and firms outside the sector is unaffected. It is relevant to a sector which faces fixed prices for some commodities, but endogenous prices for others. Tobacco quotas in the United States are estimated to have caused quota-induced producer sector waste of approximately $95 million per year during 1950–82, or about 3% of the average value of the crop.

Original language	English (US)
Pages (from-to)	865-874
Number of pages	10
Journal	American Journal of Agricultural Economics
Volume	77
Issue number	4
DOIs	https://doi.org/10.2307/1243809
State	Published - Nov 1995

Keywords

Deadweight loss
Production sector
Quotas
Waste

ASJC Scopus subject areas

Agricultural and Biological Sciences (miscellaneous)
Economics and Econometrics

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10.2307/1243809

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AB - In this paper we adapt a partial equilibrium approach of Allais and Diewert to measure the efficiency loss in the producing sector due to quotas. The measure of waste is the additional profits available by reallocation subject to constraints that the welfare of persons and firms outside the sector is unaffected. It is relevant to a sector which faces fixed prices for some commodities, but endogenous prices for others. Tobacco quotas in the United States are estimated to have caused quota-induced producer sector waste of approximately $95 million per year during 1950–82, or about 3% of the average value of the crop.

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KW - Production sector

KW - Quotas

KW - Waste

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An allais measure of production sector waste due to quotas

Abstract

Keywords

ASJC Scopus subject areas

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