Impacts of the common market organization for bananas on European Union markets, international trade, and welfare

On July 1, 1993, the European Union (EU) introduced a Common Market Organiz ation (CMO) for bananas to replace national banana market policies in membe r countries. The objective of this paper is to analyze the effects of this new EU regulation on world and EU banana markets. We first propose a graphi cal analysis of the world banana market before and under the CMO regime. We next quantify the effects of the new EU regulation on world and EU prices, on the structure of EU imports from Latin American countries, African, Car ibbean, and Pacific (ACP) countries, and EU regional suppliers, on the patt ern of consumption in the various EU Member States, and on consumers' and p roducers' welfare, using a partial equilibrium model of the world banana ma rket. Simulation results suggest that the EU banana market appears slightly more open under the CMO than under the pre-CMO regime. (C) 1999 Society fo r Policy Modeling. Published by Elsevier Science Inc.