Should we internalize intertemporal production externalities in the case of pest resistance?

Elsa Martin

No 2013/4, INRA UMR CESAER Working Papers from INRA UMR CESAER, Centre d'’Economie et Sociologie appliquées à l'’Agriculture et aux Espaces Ruraux

Abstract: Pesticides efficiency decreases with their global application by farmers. Within a strategic dynamic framework, this results in a classic intertemporal production externality. We analyze tax and subsidy schemes that can be used in order to internalize this externality. We show that they are able to restore socially optimal paths but that final time of pesticide use differs. With these schemes, farmers have a tendency to switch to alternative pest-control technology, as integrated pest management, earlier than is optimal. A lump-sum transfer is shown to be necessary to obtain a switching time equal to the socially optimal one, for the subsidy case only. Furthermore, the socially optimal switching time can be later than the one obtained under a situation without control.

Keywords: stock externality; pest resistance; technology change (search for similar items in EconPapers)
JEL-codes: C73 H23 Q10 Q3 (search for similar items in EconPapers)
Pages: 37
Date: 2013-11-29
New Economics Papers: this item is included in nep-agr and nep-gth
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