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Output Price Subsidies in a Stochastic World
Author(s) -
Chambers Robert G.,
Quiggin John
Publication year - 2005
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/j.1467-8276.2005.00737.x
Subject(s) - comparative statics , subsidy , economics , lemma (botany) , microeconomics , payment , range (aeronautics) , monotonic function , production (economics) , mathematical economics , econometrics , mathematics , finance , ecology , mathematical analysis , materials science , poaceae , market economy , composite material , biology
This article studies the comparative statics of output subsidies for firms, with monotonic preferences over costs and returns, that face price and production uncertainty. The modeling of deficiency payments, support‐price schemes, and stochastic supply shifts in a state‐space framework is discussed. It is shown how these notions can be used, via a simple application of Shephard's lemma, to analyze input‐demand shifts once comparative‐static results for supply are available. A range of comparative‐static results for supply are then developed and discussed.