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Abstract
This paper develops a multi-regional general equilibrium model (MEG-R) to compare the
social desirability of the CAP reform in the three Italian macro-regions: North, Center and
South. The model employs a mixed complementary framework that allows for the decision of
not producing a particular crop in one or more regions and presents an attempt to model
interregional trade flows. The model incorporates the links between production and
consumption that characterize farm household’s behavior and allows for heterogeneous
household responses across regions. Results show a general tendency to reallocations from
cereal crops to forage that appear more severe in the South. In this region, the reduction in
crops cannot be translated into an effective expansion of fodder and could lead to the
“deactivation” of the land.