This paper presents an approach to depict subsistence production of milk in a partial equilibrium sector model and applies this approach to Poland, Bulgaria and Romania in the European Simulation Model (ESIM). The restriction on milk production implied by the EU milk quota in a situation with increasing market demand along with decreasing subsistence production and consumption, potentially drives up prices for nontradable dairy products in the Central European Countries (CECs), and results in significantly lower net exports and lower production than if these countries do not accede to the EU. Results presented should be taken as tentative and in no way final as the empirical foundation of many of the relevant parameters is weak.


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