Efficiency of Supply Control Programmes in Income Redistribution

Jukka Kola

European Review of Agricultural Economics, 1993, vol. 20, issue 2, 183-98

Abstract: This article evaluates the efficacy of alternative supply control measures in the Finnish dairy market. The capability of measures to reduce excess supplies with the least losses to producers is illustrated by the surplus transformation model. With small income transfers, the prevailing quota system is more efficient than price regulation in income redistribution. However, a considerable improvement in consumer-taxpayer welfare can be reached by price reduction only. The applicability of consumer subsidies suffers from inelastic demand for milk. The results support the argument that producers' strong political influence enables them to avoid the most unfavorable policy choices. Copyright 1993 by Oxford University Press.

Date: 1993
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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