Credit Market Imperfections and the Distribution of Policy Rents

Pavel Ciaian and Johan Swinnen

American Journal of Agricultural Economics, 2009, vol. 91, issue 4, 1124-1139

Abstract: This article shows that credit market imperfections have important implications for the distribution of policy rents. In a model with land as fixed factor and credit market imperfections, when an area payment is given, land rents go up by more than the subsidy. On aggregate farms may lose from the subsidy. The results depend on the extent to which subsidies have direct and indirect effects on the credit constraints, on whether farms rent or own land, and on farm heterogeneity. Copyright 2009, Oxford University Press.

Date: 2009
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Working Paper: Credit Market Imperfections and the Distribution of Policy Rents (2008)
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