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Is There a Viable Market for Area‐Based Crop Insurance?
Author(s) -
Deng Xiaohui,
Barnett Barry J.,
Vedenov Dmitry V.
Publication year - 2007
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.1467-8276.2007.00975.x
Subject(s) - crop insurance , yield (engineering) , agricultural economics , subsidy , production (economics) , agricultural science , business , insurance premium , insurance policy , economics , actuarial science , agriculture , environmental science , geography , market economy , materials science , archaeology , metallurgy , macroeconomics
The performance of area yield insurance and farm‐level multiple peril crop insurance is analyzed for cotton and soybean production in Georgia and South Carolina. The analysis improves on many previous studies by utilizing actual farm‐level yield data and by comparing the two types of insurance products not only for actuarially fair premium rates but also for actual unsubsidized and subsidized premium rates. Results suggest that, even in heterogeneous production regions, area yield insurance may be a viable alternative to farm‐level insurance when premium rates for farm‐level insurance contain large positive wedges.