EC Feed Grain Spatial Equilibrium Model for Policy Analysis, An

Ludo Peters
June 1990  [90-WP 61]

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Peters, L. 1990. "EC Feed Grain Spatial Equilibrium Model for Policy Analysis, An." Working paper 90-WP 61. Center for Agricultural and Rural Development, Iowa State University.


This paper presents a multicommodity price-endogenous spatial equilibrium model of the (European Community) EC feed grain sector. The model incorporates nonintegrable feed grain demand functions which were estimated using a pseudodata approach based on a set of representative least-cost LP models of compound feed production in the EC. The price and quantity impacts of three "rebalancing" EC policies are investigated within a comparative statics framework: the abolition of the green rates or Monetary Compensatory Amounts (MCA) system, a 10% cut in support prices for EC grains, and a 10% tax on the use of imported cereal substitutes. Both "short-run" (constant livestock output) and "long-run" (variable livestock output) results are reported at the EC level.