Is There Supply Distortion In The Green Box? An Acreage Response Approach

Samira Bakhshi and William Kerr

No 51093, Working Papers from Canadian Agricultural Trade Policy Research Network

Abstract: The shift of the farm subsidies toward programs classified as being decoupled income supports in the WTO’s URAA raises the question of their true impact on production and trade. In this study, we measured the acreage effects of the Canadian whole farm programs under uncertainty. Based on the theoretical discussions regarding the role of the insurance effect in acreage decisions, we extend the theoretical restrictions examined by Chavas and Holt (1990)which enables us to include this effect in our model specification. Hence, we modified the expected utility maximization framework (under the hypothesis that farmers are risk averse) developed by Chavas and Holt (1990) and derived three distinct effects: market effects, the wealth effect, and the insurance effect.

Keywords: Agricultural and Food Policy; Crop Production/Industries; International Relations/Trade; Production Economics (search for similar items in EconPapers)
Pages: 80
Date: 2009-05
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:catpwp:51093

DOI: 10.22004/ag.econ.51093

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