Tradable input social price

Thus, if 0PCR1 : Feedlots have competitive advantage PCR=1 : Feedlots are competitively neutral 0PCR1 : Feedlots have competitive disadvantage Comparative Advantage Entries in the second row of PAM are used to determine the comparative advantage of the industry. Comparative advantage indicator are obtain through comparing the domestic cost with the difference between revenue and tradable cost, all expressed at a social price, written as Domestic Resource Cost DRC: DRC = �� − Thus, if 0DRC1 : Feedlots have comparative advantage DRC=1 : Feedlots are comparatively neutral 0DRC1 : Feedlots have comparative disadvantage Impact of Policy Analysis PAM is convenience to be used as analysis tools because it shows indirect estimations for competitive and comparative advantage. Furthermore, other indicators such as policy to input, output, and both can also be evaluated from the information in the matrix. Its processes are as shown below:

a. To Output

- Output Transfer OT The value of OT is obtained from the second column in the last row of matrix Rev t . The producer’s incentives as an impact of a policy to output is equal to difference between revenue in private and social price. It written as: Output Transfers OT = Rev t = Rev p - Rev s Thus, if: OT 0: The producer would have sufficient incentives due to a subsidy or any resource transfers to output that favorable for the system. OT 0: The producer would have limited incentives due to a tax or any resource transfers to output that unfavorable for the system. - Nominal Protection Coefficient on Output NPCO The government protection to output is reflected in the value of NPCO. The ratio describes how much the market price of output to deviate from its efficiency price. It is written as: NPCO = �� � �� Thus, if: NPCO 1: The output system is protected by policy and the producer receive higher domestic price than the world price. NPCO 1: The output system is not protected by policy and the producer receive lower domestic price than the world price.