Premium
Agricultural Export Subsidies as a Tool of Trade Strategy: Before and after the Federal Agricultural Improvement and Reform Act of 1996
Author(s) -
Leathers Howard D.
Publication year - 2001
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 - 10.1111/0002-9092.00148
Subject(s) - subsidy , argument (complex analysis) , export subsidy , agriculture , economics , legislation , competitor analysis , government (linguistics) , international economics , payment , public economics , international trade , economic policy , business , market economy , finance , law , ecology , biochemistry , chemistry , linguistics , philosophy , management , political science , biology
If the main justification for agricultural export subsidies is that they reduce government costs of deficiency payments, then the 1996 farm legislation would make U.S. export subsidies largely unnecessary. An additional argument advanced in favor of export subsidies is that their aggressive use by one country will cause competing countries to reduce or discontinue their own subsidies. This argument is explored by means of a Nash equilibrium in which countries choose both a base subsidy level and a response to competitors, and by a consistent conjectures equilibrium. Little support is found for the argument.