Agriculture Reference
In-Depth Information
where:
D = value of variable at private (market) price;
w i D = price of factor input j;
l i D = quantity of j per unit of output.
Social domestic factors = ∑w j S l j S
(A.31)
where:
D = value of variable at private (market) price;
w i S = price of factor input j at social price;
l i S = quantity of j per unit of output at social price.
Private profit (D) = π D
(A.32)
where:
Private profit (D) = A-B-C;
D = value of variable at private (market) price;
π D = profit.
Social profit (H) = π S
(A.33)
where:
Social profit (H) = E-F-G;
π S = profit;
S = value of variable at social (shadow) price.
From the PAM, measures of efficiency and policy distortions can be calculated as follows:
1. private cost ratio (PCR) = C/(A-B);
2. domestic resource cost ratio DRC = G/(E-F);
3. nominal protection coefficient on tradable outputs (NPCO) = A/E;
4. nominal protection coefficient on tradable inputs (NPCI) = B/F;
5. effective protection coefficient (EPC) = (A-B)/(E-F);
6. profitability coefficient (PC) = D/H;
7. subsidy ratio to producers (SRP) = L/E.
Where:
• PCR show the extent to which a system can afford to pay domestic factor and still
remain competitive.
• DRC ratio is an indication of whether domestic factors used are socially profitable
(DRC<1) or not (DRC>1). It is a measure of comparative advantage. According to
Search WWH ::




Custom Search