Ten Years After - Welfare Effects of the Application of the CAP in Austria, Finland and Sweden

Ten years ago, Austria, Finland, and Sweden joined the EU. The application of the Common Agricultural Policy (CAP) caused major repercussions on the agricultural sectors of the entering countries. This article analyses the welfare effects of accession to the EU on the agricultural markets in Austria, Finland and Sweden in a simple supply and demand framework, which is kept strictly identical across all three countries. The quantitative results of the study are derived by using standard partial equilibrium comparative static analysis in the Marshallian economic surplus framework. Using this method, the welfare effects are calculated for eight major cereal and livestock commodities produced in Austria, Finland, and Sweden by comparing the evolution of the markets with and without entry into the EU. The results of the analysis suggest that consumers have gained from accession and producers, on the other hand, have incurred welfare losses from changing market conditions, which however have been eased by rising budgetary support.