By Bruce L. Gardner and Gordon C. Rausser (Eds.)
The subject material of agricultural economics has either broadened and deepened and the chapters of this instruction manual current leading edge paintings within the box. This quantity includes half five of the guide on ''agricultural and meals policy'' and follows on from quantity 2A which has chapters on ''agriculture, normal assets and the environment'' and ''agriculture within the macroeconomy''. even if agricultural economists have continuously paid realization to those themes, study dedicated to them has elevated considerably in scope in addition to intensity in recent times
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Extra info for Agricultural and Food Policy
Farm product, QF o and PFo. As above, our measures of producer, consumer, and total economic surplus (PS, CS, and NS) depend on which market we look at. Table 2 lists the surplus measures for each market, and shows how they relate to one another, in accordance with the above discussion of vertical markets. The two-factor, fixed-proportions model can be used to consider the incidence of policies applied in the different markets; for instance, a subsidy or quota in the farm or retail markets. It can easily be seen in the model in Figure 9 that the incidence does not depend on whether a per unit subsidy or quota applies to output or an input when we have fixed factor proportions; only the elasticities of factor supply and retail demand, and factor shares matter.
The average quality, measured as the proportion of production and consumption in the high-quality market, increased as the quota quantity was reduced. The increase in quality increased the producer benefits (exclusive of quota rent) and decreased the consumer losses from a given quota quantity, relative to the case where quality was held constant. However, the quota rent generated by a given quota quantity was smaller than that generated in the constant-quality case, reducing the efficiency of the policy as a means of transferring income to producers.
How the policy is allowed to adjust to accommodate the changes in the market has distributional implications. S. tobacco market, Sumner and Alston (1984) elaborate on the same point in relation to more general shifts in demand for tobacco, and Brown and Martin (1996) provide some further results. 27 Hertel (1989) suggested that, without environmental targeting, acreage set-asides likely exacerbate the chemical pollution of streams and groundwater. Ch. 33: The Incidence of Agricultural Policy 1727 6.