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Campaign Contributions and Agricultural Subsidies
Author(s) -
Lopez Rigoberto A.
Publication year - 2001
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/1468-0343.00093
Subject(s) - subsidy , grossman , economics , agriculture , welfare , public economics , investment (military) , agricultural economics , market economy , political science , law , ecology , politics , keynesian economics , biology
This article examines the influence of campaign contributions on agricultural subsidies. Empirical results revealed that rent‐seeking works, i.e. contributions, influence agricultural subsidies in the manner they best serve contributors' economic interests. Eliminating campaign contributions would significantly decrease agricultural subsidies, hurt farm groups, benefit consumers and taxpayers, and increase social welfare by approximately $5.5 billion. Although contributions are not the only determinants of agricultural subsidies, investment returns to farm PAC contributors are quite high ($1 in contributions brings about $2,000 in policy transfers). In fact, the results are in sharp contrast to the “truthful contributions” assumption of the Grossman–Helpman model.