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 cutting edge paintings within the box. This quantity includes half five of the instruction manual on ''agricultural and foodstuff policy'' and follows on from quantity 2A which has chapters on ''agriculture, normal assets and the environment'' and ''agriculture within the macroeconomy''. even supposing agricultural economists have regularly paid realization to those issues, examine dedicated to them has elevated considerably in scope in addition to intensity lately
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Extra info for Agricultural and Food Policy
The third and fourth equations are derived by the application of Shephard's lemma to the cost function, and are Hicksian (output constant) demands for the two factors of 14 In his version of this model, Muth (1964), like Floyd (1965), characterized the technology using a production function instead of a cost function. , see Wohlgenant(1982), and Alston, Norton and Pardey (1995)]. M. )/OWi. The fifth equation expresses the quantity of X1 supplied as a function of its own price and an exogenous supply shifter, B1; the sixth equation is the supply o f X2.
33: The Incidence of Agricultural Policy 1721 with a less-aggregated view of producer surplus. That is, if the objective of a policy were to transfer income to suppliers of X1, an efficient policy would be to combine an input quota on X1 (set so its marginal cost per dollar of benefit to the input suppliers is 1 ÷ 8) with a subsidy on X1. The effects of combining an output subsidy with an input quota, a common policy in the United States, can be seen by combining the elements in the first and last columns of Table 3.
_ gives the effects of a 10 percent output subsidy. In the model, the demand shifter, c~, operates in the quantity direction, so we set ~ = tlZ'Q to represent an output subsidy of rQ. The relative changes in quantities and prices as a result of an output subsidy are given in the first column of Table 3. The subsidy results in an increase in both the quantity and producer price of output, while the change in consumer price is a decrease: dln P - TQ. At the same time, with the increase in production, the demands for both factors of production have increased, reflected in increases in both the quantity and price of each factor.
Agricultural and Food Policy by Bruce L. Gardner and Gordon C. Rausser (Eds.)