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Abstract
The paper uses bi-regional CGE models to analyse the effects of a change in agricultural support on
two (very different) case study regions, one within Scotland, the other in Greece. Both regions are
predominantly rural in nature but contain an urban centre as well as a rural hinterland. The results
show qualitative and quantitative differences in the total effects in both regions as well as differences
in the distribution of effects between their rural and urban parts. In particular, the negative effects of
a reduction in price support are contained within rural primary sectors in the Scottish region: nonfarm
rural sectors and urban sectors all benefit from the policy shock. In contrast, the negative
impacts of a reduction in price support are more widely spread in the Greek region, with losers in
both the urban and rural areas. These result are attributed to the stronger links between agriculture
and first stage processing sectors in the Greek study area and also the ownership of agricultural
factors by urban residents. Full decoupling at the regional level is shown to have negative aggregate
effects in both study regions, driven by the high import intensity of household commodities. Again
however there are gainers as well as losers from the policy shock suggesting a case for spatially and
sectorally targeted support to alleviate the potentially negative effects of CAP reform at a regional
level.