2120 final report.pdf - Agra CEAS Consulting

APPENDIX 2: THIRD COUNTRIESFor a change in input X 1 (feed)TS PSX1 CSX1 W1*X1*tX1*(1 0.5EX1)For a change in input X 2 (labour)TS PSX2 CSX 2 W2*X 2* tX 2*(1 0.5EX2)For a change in input X 3 (other)TS PSX3 CSX 3 W3*X 3* tX 3* (1 0.5EX3)For a change in the demand of caged shellTS Pc * Qc * nQc *(1 0.5EQc)For a change in the demand of processedTS Pp * Qp * nQp *(1 0.5EQp)For a change in the demand of alternative shellTS Pa * Qa * nQa *(1 0.5EQa)For each of the above policy scenarios we can estimate the change in consumer surplus as theresidual.The second way to measure consumer surplus in this context is to measure the change directly fromthe partial equilibrium curves in individual markets. Following Zhao et al. (2000a) it can be shownthat the change in domestic consumer surplus isCSQp(1 0.5EQ P * Qcpc) P* ( naQc* Qa EP ) *(1 0.5EQ* ( ncQa) P EP ) *(1 0.5EQacpa* Q)p* ( nQp EPp) *This approach can be used in combination with the various measures of changes in producers surplusto yield an estimate of total surplus change. It needs to be borne in mind that this formula is derivedassuming that symmetry, curvature and integrability conditions are satisfied. We ensure that theseconditions are satisfied by judicious choice of own and cross-price elasticities.In terms of which measure to employ, we considered both when undertaking the analysis. We foundlittle difference in results.414