Agricultural Policies and the GATT: Reconciling Protection, Support and Distortion

This paper analyzes the relationship between the theory of protection, farm income support and international trade distortion. To parallel those of protection, a measure of distortion is derived which compares trade volumes under support policies with those which would occur under multilateral free trade. Estimates are made of these measures for the European Community and the United States for a selection of commodities. The relationship between measures of protection and economic efficiency is also highlighted. The conclusion is that present measures of protection such as the Producer Subsidy Equivalent are confusing as measures of either trade distortion or income support. Some implications are drawn for the GAIT negotiations on agriculture and for the design of domestic policies which minimize trade distortion.Agricultural and Food Policy, International Relations/Trade,

The Welfare Economics of an Excise-Tax Exemption for Biofuels

A general theory is developed to analyze the efficiency and income distribution effects of a biofuel consumer tax credit and the interaction effects with a price contingent farm subsidy. Using the U.S. ethanol market as a stylized example, ethanol prices rise above the gasoline price by the amount of the tax credit. Corn farmers therefore gain directly while gasoline consumers only gain from any reduction in world oil prices due to the extra ethanol production and domestic oil producers lose. Because increased ethanol production improves the terms of trade in both the export of corn and the import of oil, we determine the optimal tax credit and the conditions affecting it. Historically, the intercept of the ethanol supply curve is above the gasoline price. Hence, part of the tax credit is redundant and represents ‘rectangular’ deadweight costs. The tax credit reduces the tax costs of price supports but incurs tax costs itself and increases consumer costs of corn. Price supports eliminate, create, have no effect or have an ambiguous effect on rectangular deadweight costs, depending on whether there is ex ante or ex post water in the tax credit. There are situations where ethanol production occurs only because of price supports. A stylized empirical model of the U.S. corn market is calibrated to illustrate the welfare effects of a tax credit. Net social costs of the tax credit averaged $683 million. Rectangular deadweight costs averaged$1,056 mil., more than offsetting the improved terms of trade and reduced price contingent farm subsidies, and representing over 50 percent of the tax cost of the tax credit.biofuels; tax exemption; rectangular deadweight costs; price subsidies; welfare economics

Nomadic firms in a globalizing economy: A comparative study

The location patterns of modern firms appear to exhibit floating patternswith a tendency towards footlooseness. The spatial-economic dynamics - sometimes across teh border - of firms is encapsulated in the term 'nomadic firms'. This paper adresses the issue of nomadic behaviour of firms against the background of globalisation trends. After a critical discussion of globalisation phenomena and a review of the literature on nomadic entrepreneurial behaviour, the paper sets out t formaulate a series of relevant hypotheses of spatial relocation behaviour of international firms in a globalizing network economy. The analytical framework is tested by means of interviews among actual or potential nomadic firms, in both the Netherlands and abroad. Infrastructure quality and geographical accessibility appear to play an important role, but also opportunity seeking behaviour has a prominent place in nomadic behaviour. The comparitive study among the various firms located in various countries, which aims to identify the critical relocation factors, is based on principles of modern meta-analysis.

Modeling Carbon Leakages with Forestation Policies

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either overestimate or underestimate leakage, depending on the magnitudes of the numerator and the denominator of the leakage formulas. Unlike the literature, we include the land and agricultural markets in the analysis of carbon leakage with forestation policies. In this model, carbon leakage depends on: (1) supply and demand elasticities of timber production and consumption, respectively in the country introducing a RED policy (Home country) and in the rest of the world; (2) Home country's production and consumption share in the world timber production and consumption, respectively; (3) prices of land and crop products in the Home country and the rest of the world; (4) initial allocation of land between forestry and agriculture; (5) share of total forest area set aside under RED; and (6) relative carbon sequestration potential of the forest planted on an afforested land and of the forest withdrawn from timber harvest. These potentials depend heavily on the forest species as well as on timing of the policy, and on the discount rate and time path of increasing carbon prices.carbon leakage, forestry, reduced emissions from deforestation, afforestation, Resource /Energy Economics and Policy, Q23, Q24, Q54,

Carbon Leakage with Forestation Policies

This paper analyzes carbon leakage due to reduced emissions from deforestation (RED). We find that leakage with RED is good because the policy induces afforestation that contributes to a further carbon sequestration. By ignoring the domestic component of carbon leakage, the literature can either overestimate or underestimate leakage, depending on the magnitudes of the numerator and the denominator of the leakage formulas. Unlike the literature, we include the land and agricultural markets in the analysis of carbon leakage with forestation policies. In this model, carbon leakage depends on: (1) supply and demand elasticities of timber production and consumption, respectively in the country introducing a RED policy (Home country) and in the rest of the world; (2) Home country’s production and consumption share in the world timber production and consumption, respectively; (3) prices of land and crop products in the Home country and the rest of the world; (4) initial allocation of land between forestry and agriculture; (5) share of total forest area set aside under RED; and (6) relative carbon sequestration potential of the forest planted on an afforested land and of the forest withdrawn from timber harvest. These potentials depend heavily on the forest species as well as on timing of the policy, and on the discount rate and time path of increasing carbon prices.carbon leakage, forestry, reduced emissions from deforestation, afforestation, Agricultural and Food Policy, Environmental Economics and Policy, Land Economics/Use, Q23, Q24, Q54,

On the EU–U.S. Biodiesel ‘Splash & Dash' Controversy: Causes, Consequences and Policy Recommendations

Replaced with revised version of paper on 10/26/10.splash & dash, biodiesel, blender’s tax credit, tax exemption, trade, European Union, Unites States, Agricultural and Food Policy, International Relations/Trade, F13, Q17, Q27, Q42,

Consumer Financed Export Subsidies and the Agreement on Agriculture

International Relations/Trade,

Boundary condition for Ginzburg-Landau theory of superconducting layers

Electrostatic charging changes the critical temperature of superconducting thin layers. To understand the basic mechanism, it is possible to use the Ginzburg-Landau theory with the boundary condition derived by de Gennes from the BCS theory. Here we show that a similar boundary condition can be obtained from the principle of minimum free energy. We compare the two boundary conditions and use the Budd-Vannimenus theorem as a test of approximations.Comment: 6 pages, 4 figure

The Implications of Alternative Biofuel Policies on Carbon Leakage

We show carbon leakage depends on the type of biofuel policy (tax credit versus mandate), the domestic and foreign gasoline supply and fuel demand elasticities, and on consumption and production shares of world oil markets for the country introducing the biofuel policy. The components of carbon leakage – market leakage and emissions savings – are counteracting: carbon leakage increases with market leakage but decreases with emissions savings. We also distinguish domestic and international leakage where the latter is always positive, but domestic leakage can be negative with a mandate. The IPCC definition of leakage omits domestic leakage, resulting in biased estimates. Leakage with a tax credit always exceeds that of a mandate, while the combination of a mandate and tax credit generates lower leakage than a tax credit alone. In general, a gallon of ethanol (energy equivalent) is found to replace 35 percent of a gallon of gasoline – not 100 percent as assumed by life-cycle accounting. This means ethanol emits 13 percent more carbon than a gallon of gasoline if indirect land use change (iLUC) is not included in the estimated emissions savings effect and 43 percent more when iLUC is included.biofuels, tax credit, mandate, market leakage, carbon leakage, emissions savings, domestic leakage, Resource /Energy Economics and Policy, Q27, Q41, Q42, Q54,