Crop Insurance in a Political Economy: An Alternative Perspective on Agricultural Policy
Lawmakers often subsidize farmers in times of financial distress. This article models this political impulse as a constraint on government farm policy, describing how "ex ante" government farm insurance can deter "ex post""disaster relief" and improve production incentives by countering the moral hazard that otherwise prevails. Absent "ex ante" government policy, "ex post" relief takes the form of revenue insurance, which prompts excessive entry into farm production and under-production by operating farmers. "Ex ante" government policy can raise economic and political welfare by buying out low productivity farmers and offering profitable farmers a combination of revenue insurance, price supports, and a program participation fee. Copyright 2003 American Agricultural Economics Association.
Year of publication: |
2003
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Authors: | Innes, Robert |
Published in: |
American Journal of Agricultural Economics. - American Agricultural Economics Association. - Vol. 85.2003, 2, p. 318-335
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Publisher: |
American Agricultural Economics Association |
Saved in:
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