THE WELFARE IMPLICATIONS OF NITROGEN LIMITATION POLICIES

The effects of nitrogen limitation policies on the UK fertiliser market are considered. Using a simulation model which incorporates some structural aspects of the UK fertiliser industry, the extent and distribution of the welfare effects of nitrogen tax and quota policies are estimated. The results show that, while farmers lose from both policies, the main fertiliser manufacturers may gain in the short run from a quota policy, while profits would be reduced with a nitrogen tax policy.