WELFARE IMPLICATIONS OF THE WOOL ACT

A model of the U.S. sheep industry is estimated and simulated to determine the impact of the wool incentive program on actors in U.S. sheep product markets. The simulation analysis indicates that U.S. sheep producers and lamb and wool consumers are the program's gainers while lamb and wool exporters and taxpayers are its losers. Net societal losses averaged $26.4 million per year during the 1980-85 period, considering U.S. as well as exporter interests. This loss is about 2.5% of average U.S. consumer expenditures on lamb and wool over the period