The Non-Substitution Theorem: Multiple Primary Factors and the Cost Function Approach.

The non- ub titution theorem a ert that the choice of technique i independent of pattern of final demand when efficiency prevail a to the u e of a ingle primary factor, say labor, while the a erted con tancy of theinput-output table no longer hold when more than one kind of primary factor i involved. No definite an wer ha yet been given a to whether the commodity price vector i determined independently of final demand pattern when there are multiple primary factor of production. hi paper how that the "unit co t = price" relation uniquely determine the commodity price relatively to a given factor price vector. he proof of uch a commdity price i provided by the u e of ar ki' fixed point theorem without recour e to topology.INPUT-OUTPUT ANALYSIS ; PRICES ; PRODUCTION

TRADE AND WELFARE EFFECTS OF DAIRY PRICE SUPPORT MEASURES

Analysis with a stylised model of milk price determination shows that on a dollar for dollar basis it is theoretically possible for milk price support resulting from discriminatory pricing to be as or even more trade distorting than milk price support resulting from explicit trade intervention in dairy product markets. Numerical results suggest that this result depends mainly on the initial trading status of the country in question. However, other parameters, especially the relative elasticities of demand for fluid versus manufacturing milk also matter.Agricultural and Food Policy,

Trade Effects of Dairy Pricing Arrangements

Milk producers in virtually every OECD country, and in many non-OECD countries as well, benefit from government interventions. Indeed, government support and protection for milk producers is more widespread than for any of the other commodities for which the OECD calculates producer subsidy equivalents. The purpose of the analysis reported in this paper was to investigate the relative market effects of these two varieties of government intervention in milk pricing: 1) interventions through trade measures applied to dairy products and 2) discriminatory pricing arrangements. Which kind of policy creates 'dollar-for-dollar' the greater effects? This paper shows the answer to that question is - it depends. Neither economic theory by itself, nor economic theory combined with 'plausible' ranges of numerical values for key parameters is enough to say definitely one way or another. In some plausibly real-life situations domestic milk pricing arrangements can be, at the margin, more distorting than explicit trade measures. The key determining parameters include the usual suspects - the relative elasticities of fluid and manufacturing milk demand, as well as initial price gap between fluid and manufacturing milk provided by various measures and the proportion of domestic milk production used to manufacture tradable dairy products.International Relations/Trade,