Stop-and-Go Agricultural Policies

The optimal design of farm policy and public investment in agriculture in the presence of asymmetric information between the government and farmers is studied. It is shown that a mix of capped deficiency payments and voluntary paid land diversion can implement the optimal policy outcome. Optimal pro...

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Bibliographic Details
Published in:American journal of agricultural economics 2000-02, Vol.82 (1), p.1-13
Main Authors: Bourgeon, Jean-Marc, Chambers, Robert G.
Format: Article
Language:English
Subjects:
Agricultural economics
Agricultural land
Agricultural policy
Agricultural production
Agriculture
asymmetric information
decoupled payments
Design optimization
Economics and Finance
Farm commodities
Farmers
Farming
Farms
Government payments
Humanities and Social Sciences
Incentives
Information asymmetry
Investments
Market prices
Parity
Public good
Public goods
public investment in research
Public investments
Q180
R&D
Research & development
Research & development expenditures
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Description
Summary:The optimal design of farm policy and public investment in agriculture in the presence of asymmetric information between the government and farmers is studied. It is shown that a mix of capped deficiency payments and voluntary paid land diversion can implement the optimal policy outcome. Optimal program design requires large farmers to farm all their land, and small farmers may or may not divert acreage. Decoupled policies are never optimal.
ISSN:0002-9092
1467-8276
DOI:10.1111/0002-9092.00001