Measuring Effective Protection as a Superlative Index Number: An Application to European Agriculture

In this study duality and the theory of superlative index numbers are used to obtain a theoretically consistent Effective Protection Rate (EPR) index that imposes no a priori restrictions on input‐output substitution possibilities. Within this framework, EPRs are estimated for European agriculture over the period 1973 to 1989. The empirical results demonstrate that maintaining zero input/output substitutability—a restriction embedded in all common protection measures—can lead to false results about the level of protection both across countries and time.