Tradeoffs between income distribution and welfare: The case of Turkey's integration into the European Union

The welfare and income distribution impacts of Turkey's international agricultural trade policies and integration into the EU are analyzed using Political Preference Functions together with the strategic trade setting to determine the potential for Pareto improvements. Results show that Turkey exhibits a preference to integrate with the EU from a welfare perspective, but that income distribution within the agricultural sector becomes less equal with the integration. Results also indicate that a Pareto optimal solution does not imply an equitable solution for the parties involved. Therefore, income distributional effects should be evaluated in policy analysis given that trade policies also affect the distribution of welfare within an economy as it affects the welfare of various interest groups.