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Credit Market Imperfections and the Distribution of Policy Rents
Author(s) -
Ciaian Pavel,
Swinnen Johan F.M.
Publication year - 2009
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.1467-8276.2009.01311.x
Subject(s) - subsidy , economic rent , economics , distribution (mathematics) , capital market imperfections , factor market , payment , natural resource economics , microeconomics , monetary economics , business , market economy , finance , capital market , mathematical analysis , mathematics
This article shows that credit market imperfections have important implications for the distribution of policy rents. In a model with land as fixed factor and credit market imperfections, when an area payment is given, land rents go up by more than the subsidy. On aggregate farms may lose from the subsidy. The results depend on the extent to which subsidies have direct and indirect effects on the credit constraints, on whether farms rent or own land, and on farm heterogeneity.