EU Preferential Partners in Search of New Policy Strategies for Agriculture: The Case of Citrus Sector in Trinidad and Tobago



We can see, from Table A1, that the PAM provides a visually appealing way of capturing and
presenting the data on divergences and the profits, which can be labelled as follows:

Private Profits:

D = (A - B - C)

Social Profits:

H = (E - F - G)

Output Transfers:

I = A - E

Input Transfers:

J = B - F

Factor Transfers:

K = C - G

Net Transfers:

L = D - H; or L = I - J - K

The measures of policy effects, competitiveness and comparative advantage can be easily calculated
from the PAM as follows:

Nominal Coefficient Protection (NPC)
Effective Coefficient Protection (EPC)
Producer Subsidy Equivalent (PSE)
Private Profits

=    A/E

=      (A-B)/(E-F)

=      (L/A)

=     D = (A - B - C)

Social Profits

=     H = (E - F - G)

Domestic Resource Cost Ratio (DRC)

=     G/(E-F)

The major limitation of the indicators (NPC, EPC, PSE, DRC) and the PAM is that they typically use
fixed input-output coefficients. As a result, the indicators or the PAM cannot indicate producer or
consumer responses to policy changes that reduce distortion.

12



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