Impacts of foreign policies on the gains from research and promotion
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This paper compares the 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 the policy in the absence of research/promotion-induced shifts in supply/
demand, and the additional (or indirect) effect of the policy on the 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. © 1999 Elsevier Science B.V. All rights reserved.