Die Präsentation wird geladen. Bitte warten

Die Präsentation wird geladen. Bitte warten

Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover 14.11.07.ppt Prof. Dr. Dr. h.c. P. Michael Schmitz Giessen University Tashkent;

Ähnliche Präsentationen


Präsentation zum Thema: "Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover 14.11.07.ppt Prof. Dr. Dr. h.c. P. Michael Schmitz Giessen University Tashkent;"—  Präsentation transkript:

1 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Prof. Dr. Dr. h.c. P. Michael Schmitz Giessen University Tashkent; July 2014 Lecture in the frame of the SAMUz project Empirical Research Methods

2 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Part I

3 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt 1.Definition 2.Principles of applied welfare economics a)Welfare measurement for individuals b) Aggregated welfare measurement 3.Welfare measurement in a closed economy a)without state intervention:technological progress increase of real income b)with state intervention:taxes/subsidies 4.Welfare measurement in an open economy Cost – Benefit Analysis Outline

4 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Government must make decisions regarding the adoption of public policies and projects. The branch of economics that deals with how to evaluate proposed policies/projects is known as cost-benefit-analysis or applied welfare economics Cost-benefit analysis -what is it about?-

5 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Cost-Benefit-Analysis or Applied Welfare Economics Objective How to use resources optimally to achieve the maximum well-being for the individualls in society or more simply to help society make better choices

6 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Principles of applied welfare economics I “Welfare economics is the study of how the allocation of resources affects economic well-being” (Mankiw, 2004, p. 138). Assumptions: -welfare increases with an increase of the consumtion -the social welfare is the sum of the welfare of all individuals -utility can be measured cardinally and the utility of individuals can be compared -allocation of resources depends on the followed policy -consumer sovereignty -partial analysis

7 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Principles of applied welfare economics - Starting points - perfect competition no external effects Kaldor-Hicks criterion (compensation test): „State B is preferred to state A if at least one individual is made better off without making anyone worse off – not that all individuals are actually worse off – by some feasible redistribution (compensation) following the change. (Just et al., 2004, p. 32) the Pareto criterion is not used („if it is possible to make at least one person better off when moving from state A to state B without making anyone worse off, state B is ranked higher by society than state A“ Just et al., 2004, p. 15) a reference system is used

8 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt utility is difficult to be observed and to be measured approximation for the measurement of utility: monetary units but: income and consumption decisions at various prices are observed and based on that money-based measurements of welfare effects are measured (Just et al., 2004, p. 98) !!!!!! Welfare measurement of a single consumer I Conditions:

9 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Four possible Buyers’ Willingness to pay BuyerWillingness to Pay (€) John Paul George Ringo

10 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The Demand Curve Price of Album (€) 0 Quantity of Albums Demand Willingness to pay Paul 70 Willingness to pay George 50Willingness to pay Ringo Willingness to pay John 100

11 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Measuring Consumer Surplus with the Demand Curve (a) Price = € 80 Price of Album (€) Demand 1234 Quantity of albums John’s Consumer Surplus (€ 20)

12 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Measuring Consumer Surplus with the Demand Curve (b) Price = € 70 Price of Album (€) Demand 1234 Total Consumer Surplus (€ 40) Quantity of Albums Consumer Surplus John (€ 30) Consumer Surplus Paul (€ 10)

13 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Quantity Consumer Surplus at different Prices Price 0 Demand A B C P1P1 Q1Q1 P2P2 Q2Q2 Consumer Surplus to New Consumers Additional Consumer Surplus to Initial Consumers Initial Consumer Surplus DE F How the Price Affects Consumer Surplus

14 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single consumer II

15 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single consumer II

16 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single consumer II

17 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single consumer II

18 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single consumer II Consumer surplus equals buyers’ willingness to pay for a good minus the amount they actually pay for it. Consumer surplus measures the benefit buyers get from participating in a market. Consumer surplus can be computed by finding the area below the demand curve and above the price.

19 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Production Costs of Four Possible Sellers SellerCost (€) Maria900 Luise800 Georgine600 Grandmother500

20 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The Supply Schedule Price (€) Sellers Quantity supplied  900 Maria, Luise, Georgine, Grandmother 4 800–900 Luise, Georgine, Grandmother 3 600–800Georgine, Grandmother2 500–600Grandmother1  500 None0

21 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The Supply Curve Quantity Price (€) Supply Maria‘s cost Luise‘s cost Georgine‘s cost Grandmother’s cost

22 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Measuring Producer Surplus with the Supply Curve Quantity Price (€) (a) Price = € 600 Grandmother’s producer surplus (€ 100) ’ Supply

23 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Measuring Producer Surplus with the Supply Curve Quantity Price (€) (b) Price = € 800 Georgine’s producer surplus (€ 200) Total producer surplus (€ 500) Grandmother’s producer surplus (€ 300) Supply

24 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt How the Price Affects Producer Surplus Quantity (a) Producer Surplus at Price P 1 Price 0 P1P1 Supply B C A Q1Q1 Producer Surplus

25 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt How the Price Affects Producer Surplus Quantity (b) Producer Surplus at Price P 2 Price 0 P1P1 B C Supply A Initial producer surplus Q1Q1 P2P2 Q2Q2 Producer surplus to new producers Additional producer surplus to initial producers D E F

26 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single producer

27 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single producer

28 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single producer

29 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single producer Producer surplus equals the amount sellers receive for their goods minus their costs of production. Producer surplus measures the benefit sellers get from participating in a market. Producer surplus can be computed by finding the area below the price and above the supply curve.

30 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of a single producer and consumer

31 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Principles of applied welfare economics -aggregation over individuals-

32 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Principles of applied welfare economics -aggregation over individuals-

33 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare -the surplus concept-

34 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare -the willingness to pay concept-

35 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare -the willingness to pay concept-

36 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare -the willingness to pay concept-

37 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare -the surplus and the willingness to pay concept-

38 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Social Welfare Surplus concept (indirect) W = CS + PS Wwelfare CSconsumer’s surplus PSproducer’s surplus Willingness to Pay concept (direct) W = WtP – VC WWelfare WtPWillingness to Pay („Nutzen“) VCvariable costs Both concepts should give the same result!

39 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt With the help of consumer and producer surplus we can answer the following question: –is the allocation of resources through the market function somehow wished? The allocation of the resources is efficient when the maximum total surplus is achieved Efficieny of the market equilibrium

40 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright©2003 Southwestern/Thomson Learning Quantity Price 0 Supply Demand Cost to sellers Cost to sellers Value to buyers Value to buyers Value to buyers is greater than cost to sellers. Value to buyers is less than cost to sellers. Equilibrium quantity Figure 8 The Efficiency of the Equilibrium Quantity

41 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt With the help of consumer and producer surplus we can answer the following question: –is the allocation of resources through the market function somehow wished? The allocation of the resources is efficient when the maximum total surplus is achieved Efficieny of the market equilibrium

42 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Because the equilibrium outcome is an efficient allocation of resources, the social planner can leave the market outcome as he/she finds it. This policy of leaving well enough alone goes by the French expression laissez faire. Evaluation of the market equilibrium

43 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Three Insights Concerning Market Outcomes –Free markets allocate the supply of goods to the buyers who value them most highly, as measured by their willingness to pay. –Free markets allocate the demand for goods to the sellers who can produce them at least cost. –Free markets produce the quantity of goods that maximizes the sum of consumer and producer surplus. Market Efficiency

44 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Surplus concept (indirect) W = CS + PS + St Wwelfare CSconsumer’s surplus PSproducer’s surplus StBudget effects or taxpayer’s effects Willingness to Pay concept (direct) W = WtP – VC + (C) W = WtP – VC + (ER – IE) WWelfare WtPWillingness to Pay („Nutzen“) VCvariable costs (CNet foreign currency refund ERExport Refund IEImport Expenditure) Both concepts should give the same result! Social Welfare

45 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt b  PS= + b + c  CS= + a – b  W = + a + c  WtP= +a+c+d+e -[  VC= +d+e ]  W = +a+c Welfare effects of income increase quantity price supply D0D0 D1D1

46 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt  CS= +a+b+c  PS= –a +d+e  W = +b+c+d+e  WtP= +c +e+f -[  VC= –b –d +f ]  W =+b+c+d+e f quantity price Welfare effects of technological progress S1S1 S0S0 D

47 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The deadweight loss of taxation - production tax as amount of tax per production unit- P0P0 Producer i Market quantity price t MCi  Si=2q Q Si Q Si,new MCi new  Si new =2q+t t S0S0 S1S1 D quantity price Q S,D Q S,D mew P0P0 PDPD PSPS a b c d ΔCS=-a-b ΔPS=-c-d ΔSt=a+c ΔW=-b-d

48 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Consumer surplus Producer surplus Price of Steel 0 Quantity of Steel Domestic supply Domestic demand Equilibrium price Equilibrium quantity Figure 1The Equilibrium without International Trade

49 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Equilibrium Without Trade –Results: Domestic price adjusts to balance demand and supply. The sum of consumer and producer surplus measures the total benefits that buyers and sellers receive. The Equilibrium without international trade

50 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Equilibrium Without Trade –Assume: A country is isolated from rest of the world and produces steel. The market for steel consists of the buyers and sellers in the country. No one in the country is allowed to import or export steel. The determinants of trade

51 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt What determines whether a country imports or exports a good? Who gains and who loses from free trade among countries? What are the arguments that people use to advocate trade restrictions? Determinants of trade

52 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt If the country decides to engage in international trade, will it be an importer or exporter? The World Price and Comparative Advantage

53 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The effects of free trade can be shown by comparing the domestic price of a good without trade and the world price of the good. The world price refers to the price that prevails in the world market for that good. The World Price and Comparative Advantage

54 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt If a country has a comparative advantage, then the domestic price will be below the world price, and the country will be an exporter of the good. The World Price and Comparative Advantage

55 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt If the country does not have a comparative advantage, then the domestic price will be higher than the world price, and the country will be an importer of the good. The World Price and Comparative Advantage

56 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Price of Steel 0 Quantity of Steel Domestic supply Price after trade World price Domestic demand Exports Price before trade Domestic quantity demanded Domestic quantity supplied Figure 2 International Trade in an Exporting Country

57 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western D C B A Price of Steel 0Quantity of Steel Domestic supply Price after trade World price Domestic demand Exports Price before trade Figure 3 How Free Trade Affects Welfare in an Exporting Country

58 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western D C B A Price of Steel 0Quantity of Steel Domestic supply Price after trade World price Domestic demand Exports Price before trade Producer surplus before trade Consumer surplus before trade Figure 3 How Free Trade Affects Welfare in an Exporting Country

59 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt How Free Trade affects welfare in an exporting country

60 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The analysis of an exporting country yields two conclusions: – Domestic producers of the good are better off, and domestic consumers of the good are worse off. –Trade raises the economic well-being of the nation as a whole. The winners and losers from trade

61 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt International Trade in an Importing Country –If the world price of steel is lower than the domestic price, the country will be an importer of steel when trade is permitted. –Domestic consumers will want to buy steel at the lower world price. –Domestic producers of steel will have to lower their output because the domestic price moves to the world price. The gains and losses of an importing country

62 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Price of Steel 0 Quantity Price after trade World price of Steel Domestic supply Domestic demand Imports Domestic quantity supplied Domestic quantity demanded Price before trade Figure 4 International Trade in an Importing Country

63 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western C B D A Price of Steel 0 Quantity of Steel Domestic supply Domestic demand Price after trade World price Imports Price before trade Figure 5 How Free Trade Affects Welfare in an Importing Country

64 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western C B A Price of Steel 0 Quantity of Steel Domestic supply Domestic demand Price after trade World price Price before trade Consumer surplus before trade Producer surplus before trade Figure 5 How Free Trade Affects Welfare in an Importing Country

65 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western C B D A Price of Steel 0 Quantity of Steel Domestic supply Domestic demand Price after trade World price Imports Price before trade Producer surplus after trade Consumer surplus after trade Figure 5 How Free Trade Affects Welfare in an Importing Country

66 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt How Free Trade affects welfare in an importing country

67 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt How Free Trade Affects Welfare in an Importing Country –The analysis of an importing country yields two conclusions: Domestic producers of the good are worse off, and domestic consumers of the good are better off. Trade raises the economic well-being of the nation as a whole because the gains of consumers exceed the losses of producers. The winners and losers from trade

68 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The gains of the winners exceed the losses of the losers. The net change in total surplus is positive. The winners and losers from trade

69 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt A tariff is a tax on goods produced abroad and sold domestically. Tariffs raise the price of imported goods above the world price by the amount of the tariff. The effects of a tariff

70 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D pipi qwAqwA qwNqwN pwpw qiNqiN qiAqiA ac d b qwMqwM qiMqiM The effects of an import tariff (small country)

71 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D pipi qwAqwA qwNqwN pwpw qiNqiN qiAqiA  PS= + a  CS= – a – b – c – d  St= + c  W = – b – d ac d b qwMqwM qiMqiM The effects of an import tariff (small country)

72 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D pipi qiDqiD qiSqiS pwpw qwSqwS qwDqwD qiXqiX qwXqwX acdb The effects of an export subsidy (small country)

73 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D pipi qiDqiD qiSqiS pwpw qwSqwS qwDqwD qiXqiX qwXqwX  PS= + a + b + c  CS= – a – b  St= - [b + c + d ]  W = – b – d acdb The effects of an export subsidy (small country)

74 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D increase of variable costs qiDqiD qiSqiS qwDqwD qwSqwS pipi pwpw decrease of Willingness to Pay The effects of an export subsidy (small country)

75 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D increase of variable costs increase of export refund qiDqiD qiSqiS qwDqwD qwSqwS pipi pwpw decrease of Willingness to Pay The effects of an export subsidy (small country)

76 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt What happens if a country is a big one and applies a foreign trade policy? 1.Change of domestic price level due to import tariff and/or export subsidy 2.Change of imported/exported quantities (i.e. lower quantity is imported and more is exported 3.Increase of supply in the world markets 4.Decrease of world market prices!

77 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Why does the higher export supply decrease the world market price? EA=Export Supply = (Exportangebot) IN=Import Demand =(Importnachfrage) Price Quantity

78 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare Effects of the guaranteed Price (Big exporting country) Assumption: The higher export supply leads to the decrease of the world market price from Pw to P`w ΔCS=-b-c ΔPS =b+c+d ΔST =-(c+d+e+g+h+i) ΔW= -c-e-g-h-i Allocation TOT Losses Losses Price Quantity

79 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Summary There are various arguments for restricting trade: protecting jobs, defending national security, helping infant industries, preventing unfair competition, and responding to foreign trade restrictions. Economists, however, believe that free trade is usually the better policy.

80 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt References used, suggested reading Henrichsmeyer, W. and H. P. Witzke (1994). Agrarpolitik Band 2, Bewertung und Willensbildung. Stuttgart: Eugen Ulmer Verlag Just, R. E., Hueth, D. L. and A. Schmitz (2004). The Welfare Economics of Public Policy, A Practical Approach to Project and Policy Evaluation. Edward Elgar Publishing. Mankiw, N. G. (2004). Principles of Economics, 3rd Edition. Thomson South-Western.

81 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Part II

82 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt 4.Recap - Welfare measurement in an open economy 5.External effects a)negative externalities b)positive externalities 6.Market power and rent seeking: monopoly 7.Second best theory:a) monopoly and negative ext. effects b) price support and unemployment 8.Welfare measurement of multiple price changes 9.Empirical examples of cost-benefit Analysis Cost – Benefit Analysis Outline

83 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt D p* q* CS = WtP – CE Welfare measurement of a single consumer Consumer surplus (CS) Consumer expenditure (CE) quantity price

84 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p* q* PS = PR – VC quantity price Welfare measurement of a single producer producer’s surplus (PS) Variable Costs (VC)

85 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S D p* q* producer’s surplus consumer’s surplus quantity price Welfare measurement of single producers & consumers

86 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Surplus concept (indirect) W = CS + PS + St Wwelfare CSconsumer’s surplus PSproducer’s surplus StBudget effects or taxpayer’s effects Willingness to Pay concept (direct) W = WtP – VC + (C) W = WtP – VC + (ER – IE) WWelfare WtPWillingness to Pay VCvariable costs CNet foreign currency refund ERExport Refund IEImport Expenditure) Both concepts should give the same result! Social Welfare

87 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Exercise Calculation of CS and PS Given a demand function: X D = 12 - p and a supply function: X S = 2 p 1. find p* and x * used in the demand or supply functions 2. calculate the consumer surplus (CS) 3. calculate the produce surplus (PS) and the total welfare

88 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Exercise Answer CS = 0.5(p p - p *) x * CS = 0.5(12 - 4)8 = 32 PS = 0.5 (p * - p S ) x * PS = 0.5 (3 - 0) 8 = 16 Total Welfare = CS+PS Total Welfare = 32+16= 48

89 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The deadweight loss of taxation - production tax as amount of tax per production unit- P0P0 Producer i Market quantity price t MCi  Si=2q Q Si Q Si,new MCi new  Si new =2q+t t S0S0 S1S1 D quantity price Q S,D Q S,D mew P0P0 PDPD PSPS a b c d ΔCS=-a-b ΔPS=-c-d ΔSt=a+c ΔW=-b-d

90 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western C B D A Price of Steel 0 Quantity of Steel Domestic supply Domestic demand Price after trade World price Imports Price before trade Figure 5 How Free Trade Affects Welfare in an Importing Country

91 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt S p q D pipi qwAqwA qwNqwN pwpw qiNqiN qiAqiA  PS= + a  CS= – a – b – c – d  St= + c  W = – b – d ac d b qwMqwM qiMqiM The effects of an import tariff (small country)

92 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare Effects of the guaranteed Price (Big importing country) Assumption: The lower import demand leads to the decrease of the world market price from Pw to P`w ΔCS=-a-b-c-d ΔPS =a ΔST =c+e ΔW= -b-d+e Allocation TOT Losses Losses Q Price

93 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare Effects of the guaranteed Price (Big exporting country) Assumption: The higher export supply leads to the decrease of the world market price from Pw to P`w ΔCS=-b-c ΔPS =b+c+d ΔST =-(c+d+e+g+h+i) ΔW= -c-e-g-h-i Allocation TOT Losses Losses Price Quantity

94 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Externalities An externality refers to the uncompensated impact of one person’s actions on the well-being of a bystander (Mankiw, 2004) Case when an action of an economic agent affects the utility or production possibilities of another in a way that is not reflected in the market place (Just et al., 2004)

95 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Negative externalities lead markets to produce a larger quantity than is socially desirable. Positive externalities lead markets to produce a smaller quantity than is socially desirable. Externalities Appear when there is influence of the economic activities of producer or consumers (economic units) over other economic units, they cause advantages or disadvantages without being evaluated Externalities cause markets to be inefficient, and thus fail to maximize total surplus

96 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Negative external effects quantity price D S  MC private  How can I show in this diagram the social effects? With the help of the damage function!

97 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Damage function = Relationship between production quantities and negative external effects quantity External effect in monetary units Negative external effect (NEE) = ¼ q 2 Marginal External Effect (MEE) =

98 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt quantity price D S  MC private S*  MC social=MC private + MEE MEE (marginal external effect) q private q social Negative external effects (without trade)

99 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt quantity price D S  MC private S* MEE q private q social a b c d Reference system: q social ΔVC social =ΔVC private + ΔVC ext = c + d + d = c + d + a + b Negative external effects (without trade) p private p social

100 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Internalising an externality Altering incentives so that people take into account the externality and act analogous

101 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt The Types of Private Solutions Moral norms and social sanctions Voluntary organizations (foundations and associations) Contracts between parties

102 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Coase Theorem: The private economic actors can solve the problem of externalities among themselves. Whatever initial distribution of rights, the interested parties can always reach a bargain in which everyone is better off and the outcome is efficient.

103 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Why private solutions do not always work? Transaction costs Breakdown of agreements Coordination problem of the large number of interested parties

104 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Internalising an externality Achieving the Socially Optimal Output The government can remedy an externality by Regulation, i.e. making certain behaviours either required or forbidden or by using market based policies like imposing a tax (or a subsidy) on the producer to reduce (or increase) the equilibrium quantity to the socially desirable quantity. Example Pigovian Taxes

105 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt quantity price D S  MC private S*  MC social q private q social ΔCS=-a-b-c ΔPS =-e-f-g ΔST =a+b+e+f ΔEA 1 = g+c+d ΔW= +d Internalising an externality Pigovian taxes P2P2 PoPo P1P1 d a bc e f g 1 External Agents

106 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Positive external effects (with trade) quantity price D S* S  MC private PwPw PiPi a b c d e q S,p q S,s q D,2 q D,1 Import tariff: ΔU=-d-e -(ΔVCs)=-(+c) -(ΔIE)=-(-b-c-e) ΔW=+b-d ΔU=0 -(ΔVCs)=-(+c) -(ΔIE)=-(-b-c) ΔW=+b by-product distortion Producer subsidy:

107 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Monopoly quantity price P comp. q comp. D

108 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Monopoly quantity price P comp. q comp. q mon. MR monopoly D  selling price function P mon

109 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Quantity of Output Demand (a) A Competitive Firm’s Demand Curve(b) A Monopolist’s Demand Curve 0 Price Quantity of Output 0 Price Demand Figure 2 Demand Curves for Competitive and Monopoly Firms

110 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Quantity of Water Price $ –1 –2 –3 –4 Demand (average revenue) Marginal revenue Figure 3 Demand and Marginal-Revenue Curves for a Monopoly

111 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Quantity QQ0 Costs and Revenue Demand Average total cost Marginal revenue Marginal cost Monopoly price Q MAX B 1. The intersection of the marginal-revenue curve and the marginal-cost curve determines the profit-maximizing quantity... A and then the demand curve shows the price consistent with this quantity. Figure 4 Profit Maximization for a Monopoly

112 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Copyright © 2004 South-Western Monopoly profit Average total cost Quantity Monopoly price Q MAX 0 Costs and Revenue Demand Marginal cost Marginal revenue Average total cost B C E D Figure 5 The Monopolist’s Profit

113 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Monopoly quantity price P comp. q comp. q mon. MR monopoly D  selling price function P mon a b c ΔCS=-a-b ΔPS=+a-c Δbudget=0 ΔW=-b-c

114 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt quantity price P comp. q comp. q mon. MR monopoly D  selling price function P mon Monopoly and negative external effects S private S social - qsqs -

115 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt quantity price P comp. q comp. q mon. MR monopoly D  selling price function P mon Monopoly and negative external effects S private S social qsqs

116 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Price support and unemployment -- quantity price D S private PwPw PiPi

117 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Price support and unemployment quantity price D S private S social PwPw PiPi ab c d e f g ΔU=-b-e -(ΔVC)=-(+g) ΔER=e+f+g -(ΔIE)=0 ΔW=-b+f

118 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of multiple price changes hrs of labour wage Value of marginal product (demand curve for labor) Input (factor) marketOutput market quantity price S(W 0 ) a PS= total revenue – variable cost = value of product – wage = a W0W0 L0L0

119 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of multiple price changes a) Factor price changes (falls), by constant output prices hrs of labour wage D Input (factor) marketOutput market quantity price a W0W0 L0L0 S(W 0 ) W1W1 L1L1 b c d S(W 1 ) P0P0 _ q0q0 q1q1 y z x ΔPS = b+c = z

120 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of multiple price changes b) Output price changes (increases), by constant input prices hrs of labour wage D (P 0 ) Input (factor) marketOutput market quantity price a W0W0 L0L0 S(W 0 ) L1L1 b P0P0 _ q0q0 q1q1 ΔPS = a = b P1P1 D (P 1 )

121 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of multiple price changes c) Simultaneous changes of input & output prices, 1 variable factor hrs of labour wage D (P 0 ) Input (factor) marketOutput market quantity price a W0W0 L0L0 S(W 0 ) L1L1 b P0P0 ΔPS = x+y+z P1P1 D (P 1 ) S(W 1 ) W1W1 c d v x y z ΔPS = a+b+d

122 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Welfare measurement of multiple price changes - Sequential measurement of welfare - a) P 0 → P 1, W 0 conts. W 0 → W 1, P 1 conts. W 0 → W 1, P 0 conts. P 0 → P 1, W 1 conts. ΔPS(output)=+a ΔPS(input)=+y+z ΔPS=a+y+z ΔPS(input)=+y ΔPS(output)=+a+b ΔPS=a+b+y b) ΔPS = x+y+z = a+b+d = a+y+z = a+b+y  b=z a=x d=y

123 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Empirical Measurement of Economic Policies Numeric equilibrium models have been developed to evaluate ex ante effects of economic policies: Policy Impact Studies General Equlibrium Models explain the whole economies, whereas the Partial Equlibrium Models are usefull for more elaborate sectoral analysis Comparative static-Dynamic One product-multi product One region-multi region Homogenous goods-heterogenous goods

124 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Computable General Equilibrium (CGE) The General Equilibrium models consist of a system of equations, which cover all the money and goods flows in an economy For the calculation of General Equilibrium Models variables must be determined eather as the model-endogenous or exogenous By recursive iteration all markets are simultaneously being brought into the equilibrium.Therefore, wages, prices, investment and growth, state budget, export and import volumes, interest rates and other variables can be determined.

125 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt A SAM is a square matrix in which each transaction is recorded only once in a cell of its own – it is conventionally agreed that the entries made in rows represent incomes or receipts, whilst the entries made in columns represent outlays or expenditures - so, for each row there is a corresponding column, i.e. for every income there exists a corresponding expenditure, with their totals being equal. Social accounting Matrix SAM

126 Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover ppt Thank you for your attention!


Herunterladen ppt "Institut für Agribusiness Institut für Agrarpolitik und Marktforschung Hannover 14.11.07.ppt Prof. Dr. Dr. h.c. P. Michael Schmitz Giessen University Tashkent;"

Ähnliche Präsentationen


Google-Anzeigen