Quality Responses to Agricultural Policies

Jennifer S. James

No 123668, 2000 Conference (44th), January 23-25, 2000, Sydney, Australia from Australian Agricultural and Resource Economics Society

Abstract: Most policy analyses are conducted using a model of a single market for a homogenous commodity. Usually, the commodity of interest is not truley homogenous, but is treated as such for the sake of simplicity. In doing so, analysts are implicitly assuming that a single-market model of a homogeneous product closely approximates true policy effects. This paper explores the implications of this assumption. The effects of the homogeneity assumption are shown for the simple case of a product available in two qualities, when market-distorting policies are introduced. It is shown that, for plausible parameter values, ignoring quality responses can have substantial impacts on the estimated welafare effects of stereotypical commodity price support policies. In addition, for a given transfer to producers, a model that incorporates quality responses to policies will imply different settings for policy instruments than a model of homogeneous commodity, and in some cases, different instruments. For some transfers, the inclusion of quality responses will switch the transfer efficiency ranking of policies.

Keywords: Agribusiness; Public Economics (search for similar items in EconPapers)
Pages: 37
Date: 2000-01-03
References: Add references at CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/123668/files/JamesJennifer1.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aare00:123668

DOI: 10.22004/ag.econ.123668

Access Statistics for this paper

More papers in 2000 Conference (44th), January 23-25, 2000, Sydney, Australia from Australian Agricultural and Resource Economics Society Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().