MEASURING EFFECTIVE PROTECTION AS A SUPERLATIVE INDEX NUMBER - AN APPLICATION TO EUROPEAN AGRICULTURE

In this study duality and the theory of superlative index numbers are used to obtain a theoretically consistent Effective Protection Rate (E PR) index that imposes no a priori restrictions on input-output substi tution possibilities. Within this framework, EPRs are estimated for Eu ropean agriculture over the period 1973 to 1989. The empirical results demonstrate that maintaining zero input/output substitutability-a res triction embedded in all common protection measures-can lead to false results about the level of protection both across countries and time.