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Budgetary and Producer Welfare Effects of Revenue Insurance
Author(s) -
Hennessy David A.,
Babcock Bruce A.,
Hayes Dermot J.
Publication year - 1997
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 - 10.2307/1244441
Subject(s) - revenue , subsidy , marginal revenue , revenue assurance , revenue center , welfare , revenue model , business , redistribution (election) , microeconomics , public economics , economics , finance , market economy , politics , political science , law
The efficiency of redistribution of government‐provided revenue insurance programs is compared with the efficiency of the 1990 farm program. The results indicate that revenue insurance would be more efficient because it would provide subsidies when and only when revenue is low and marginal utility is high, and it works on the component of the objective function (revenue) that is of greatest relevance to producers. Simulation results indicate that a revenue insurance scheme that guarantees 75% of expected revenue to risk‐averse producers could provide approximately the same level of benefits as the 1990 program, at as little as one‐fourth the cost.