Review of Agricultural Economics—Volume 28, Number 2—Pages 195–211 Evaluating the Market and Welfare Impacts of Agricultural Policies in Developed Countries: Comparison of Partial and General Equilibrium Measures

We revisit the question of choosing partial equilibrium or general equilibrium modeling in applied policy analysis in the context of evaluating the effects of a complete phase-out of the Common Agricultural Policy (CAP) of the European Union. We compare the results of three models—two three-sector general equilibrium models (one with an additional major distortion in the nonagricultural sector) and a two-sector partial equilibrium model. We find that the market effects of a complete phase-out of the CAP are quite comparable across these models. On the other hand, the measured welfare impacts may depend on the modeling choice. Agriculture continues to be a major bone of contention in the negotiationsof regional trade agreements, as well as in the ongoing multilateral trade negotiations conducted by the World Trade Organization (WTO). It is widely acknowledged that the difficulties in making some progress in the agricultural dossiers significantly contributed to the failure of the fifth WTO Ministerial Con-ference in Cancun in September 2003. Indeed, there remains disagreement and confusion as to the true extent of global farm support. Perhaps most important, there is still considerable debate over the impacts of these agricultural policies. Numerous quantitative analyses have been performed. But the attributes of the models used differ, and so do the derived results. The diversity of modeling approaches is understandable: there are many unresolved modeling challenges and no model can serve all purposes (Westhoff et al.). Whereas economists may Alexandre Gohin is a researcher at INRA, Rennes, France, and an associate economis