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Shifting Foundations of Agricultural Policy Analysis: Welfare Economics When Risk Markets Are Incomplete
Author(s) -
Runge Carlisle Ford,
Myers Robert J.
Publication year - 1985
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 - 10.2307/1241363
Subject(s) - welfare , citation , schools of economic thought , agriculture , applied economics , economics , library science , political science , positive economics , law , neoclassical economics , computer science , history , archaeology
The neat alignment of resources, output, and prices specified by the perfect competition model is far from duplicated in free markets, and the equally neat alignment assumed under the constraints of a program is not experienced when programs are in effect. In particular, areas under empirically determined supply curves are unlikely to represent opportunity costs. The basic theory is invaluable in providing a conceptual orientation for the analysis of programs, but the assumptions implicit in the literal use of simple forms of it for policy conclusions are breathtakingly heroic.