Explaining Differences in Milk Quota Values: The Role of Economic Efficiency

Antonio Alvarez, Carlos Arias () and Luis Orea

No 2004/01, Efficiency Series Papers from University of Oviedo, Department of Economics, Oviedo Efficiency Group (OEG)

Abstract: This paper explores the relationship between milk quota values and economic efficiency in order to analyze current government interventions in quota allocations among producers. For this purpose, we estimate a short-run variable cost function using a panel of Spanish dairy farms. Quota values are then decomposed into economic efficiency, price, and scale effects in order to assess the relative influence of these factors on quota values. We find that efficiency is important in explaining quota values but is uncorrelated with observable farm characteristics. This casts doubts on the government’s ability to allocate quotas to efficient farms in the way a well-functioning quota market does.

Keywords: cost function; economic efficiency; milk; quota values (search for similar items in EconPapers)
Pages: 26
Date: 2004
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Journal Article: Explaining Differences in Milk Quota Values: The Role of Economic Efficiency (2006)
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