An Allais Measure of Production Sector Waste Due to Quotas

Lilyan E. Fulginiti and Richard K. Perrin

No 18566, Hebrew University of Jerusalem Archive from Hebrew University of Jerusalem

Abstract: This paper adapts 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 for 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 State are estimated to have caused quota-induced producer-sector waste of approximately $95 million per year during 1950-82, or about 3 percent of the average value of the crop.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 23
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:ags:hebarc:18566

DOI: 10.22004/ag.econ.18566

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