 Evaluating the Benefits from Liberalization: are Standard Walrassian Models Relevant?Jean-Marc Boussard (), Françoise Gérard and Marie Gabrielle Piketty No 232587, 89th Seminar, February 2-5, 2005, Parma, Italy from European Association of Agricultural Economists Abstract: While measuring the benefits from liberalisation is obviously important, from a theoretical as well as from a political point of view, one may question the validity of the presently widespread Walrassian approach. The latter does not take account of the fact that supply is just as must (and perhaps more) risk as (average) price responsive. Now, it turns out that if (contrary to the strong versions of the “rational expectation hypothesis”), producers do not take their decisions on the basis of equilibrium prices only, then the market, instead of equilibrium, can generate very harmful seemingly random fluctuations. These considerations are incorporated into a partial equilibrium model of the world sugar industry, and a GTAP style general equilibrium model of the world economy. In both cases, liberalisation, preventing price stabilisation policies, results in more instability, and a decrease in welfare. Such an outcome is specific of agriculture and other low price elasticity commodities. Keywords: Agricultural and Food Policy; Research Methods/ Statistical Methods (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae89:232587 Access Statistics for this paper More papers in 89th Seminar, February 2-5, 2005, Parma, Italy from European Association of Agricultural Economists Contact information at EDIRC. |
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