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A TWO-STAGE MODEL OF THE DEMAND FOR SPECIALTY CROP INSURANCE

Timothy James Richards

Journal of Agricultural and Resource Economics, 2000, vol. 25, issue 01

Abstract: Recent proposals to reform the federal Multiple-Peril Crop Insurance Program for specialty crops raised concerns that a higher cost for catastrophic-level coverage would significantly reduce program participation. This study estimates the demand for three levels of insurance coverage (50%, 65%, 75%) using aggregate data from grape production in 11 California counties from 1986-96. A discrete/continuous econometric model of the choice of coverage level and the amount of insurance finds that the price-elasticity of demand for 50% coverage is elastic, suggesting that premium increases may indeed reduce participation significantly. Such increases may also cause a significant reallocation of growers among coverage levels.

Keywords: Risk and Uncertainty (search for similar items in EconPapers)
Date: 2000
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http://purl.umn.edu/30828 (application/pdf)

Related works:
Working Paper: A TWO-STAGE MODEL OF THE DEMAND FOR SPECIALTY CROP INSURANCE (1999) Downloads
Working Paper: A Two Stage Model of the Demand For Specialty Crop Insurance (1998) Downloads
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