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Why do transaction costs of agricultural policies vary?
Author(s) -
Rørstad Per Kristian,
Vatn Arild,
Kvakkestad Valborg
Publication year - 2007
Publication title -
agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.29
H-Index - 82
eISSN - 1574-0862
pISSN - 0169-5150
DOI - 10.1111/j.1574-0862.2007.00172.x
Subject(s) - transaction cost , asset (computer security) , common agricultural policy , agricultural policy , economics , point (geometry) , public economics , asset specificity , payment , agriculture , production (economics) , direct payments , database transaction , business , microeconomics , economic policy , finance , computer science , database , ecology , geometry , computer security , mathematics , european union , biology
Policy related transaction costs (TCs) is an important issue when evaluating different policy options. However, TCs are often not taken into account in policy evaluations, but may be as important for efficiency as the direct production costs. Different policies may result in different TCs, and the main aim of this article is to explore possible reasons for these differences. We compare the level of TCs for 12 different agricultural policy measures in Norway, and we analyze the causes of the differences along three different dimensions: asset specificity, frequency, and point of policy application. At the national level we find that all three dimensions are of importance when explaining the differences, while variation in TCs incurred by farmers are mainly due to differences in point of policy application and asset specificity. Data show that direct price support has the lowest TCs, while more direct payments for environmental amenities has the highest.