| Abstract: | This paper compares llie direct and indirect effects of rest-of-the-world (ROW) policy on welfare in country A: the direct effect due to the change in world price caused by (he policy in (he absence of research/promotion-induced shifts in supply/demand, and the additional (or indirect) effect of the policy on (he welfare gain to country A from its investment in research and promotion. The results showed that the reduction in aggregate economic benefits from research/promotion due to a world price-reducing policy in ROW could be in the range of 25-50% of the direct reduction in social welfare due to the ROW policy. In the case of Australian beef/veal, it is possible for the welfare impact of the ROW policy via research payoff in country A to exceed the direct welfare cost. |
