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Agricultural Policies and Structural Change in French Dairy Farms: A Nonstationary Markov Model
The aim of this paper is to gain an understanding into how agricultural policies have affected structural
change in the French dairy sector. A nonstationary Markov model is estimated using a Generalized
Cross Entropy approach. Results show that while the price of cow’s milk encourages farm growth,
direct payments and quota restriction favor small farms. The price signal is a key factor of structural
change. As a result, higher milk prices may accelerate the trend toward the further growth of dairy
farms. Settlement policy and technical change seem not to slow this trend.
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