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Stop‐and‐Go Agricultural Policies
Author(s) -
Bourgeon JeanMarc,
Chambers Robert G.
Publication year - 2000
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/0002-9092.00001
Subject(s) - agriculture , investment (military) , payment , government (linguistics) , business , outcome (game theory) , public policy , agricultural economics , natural resource economics , public economics , economics , finance , microeconomics , economic growth , geography , linguistics , philosophy , politics , political science , law , archaeology
Abstract The optimal design of farm policy and public investment in agriculture in the presence of asymmetric information between the government and farmers is studied. It is shown that a mix of capped deficiency payments and voluntary paid land diversion can implement the optimal policy outcome. Optimal program design requires large farmers to farm all their land, and small farmers may or may not divert acreage. Decoupled policies are never optimal.