The Goals of U.S. Agricultural Policy: A Mechanism Design Approach
This article examines motivations underlying the government's choice of alternative policy mechanisms for subsidizing agriculture. Optimal policies are analyzed for three government objectives: one where the government wishes to ensure a minimum level of net income for all farmers, a second where the government's only concern is to transfer income from consumers and taxpayers to the farm sector, and a final “augmented” income-transfer objective. The analysis offers an explanation for agricultural policy mechanisms that involve overproduction by high-cost producers, relative to a free-market equilibrium. Such a distortion might arise from the existence of nonmarket values for the production of relatively high-cost farmers in the government's objective. Copyright 2000, Oxford University Press.
Year of publication: |
2000
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Authors: | Hueth, Brent |
Published in: |
American Journal of Agricultural Economics. - Agricultural and Applied Economics Association - AAEA. - Vol. 82.2000, 1, p. 14-24
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Publisher: |
Agricultural and Applied Economics Association - AAEA |
Saved in:
Online Resource
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