Summary

This report documents the specification of an equilibrium displacement model (EDM) of the Australian sheep and wool industries developed by Mounter (2007) in PhD research at the University of New England. The model is capable of estimating and comparing the potential benefits from R&D and generic promotion investments, and other policy changes, in the different sectors and markets of the Australian sheep and wool industries. Inclusive in the model are the multiple components of the Australian sheep and wool industries to account for cross-product interactions not considered in most previous studies. A high degree of industry disaggregation within the model enables estimation of the distribution of the potential benefits among the various industry sectors.