The Goals of U.S. Agricultural Policy: A Mechanism Design Approach

Brent Hueth ()

American Journal of Agricultural Economics, 2000, vol. 82, issue 1, 14-24

Abstract: This article examines motivations underlying the government's choice of alternative policy mechanisms for subsidizing agriculture. Optimal policies are analyzed for three government objectives: one where the government wishes to ensure a minimum level of net income for all farmers, a second where the government's only concern is to transfer income from consumers and taxpayers to the farm sector, and a final “augmented” income-transfer objective. The analysis offers an explanation for agricultural policy mechanisms that involve overproduction by high-cost producers, relative to a free-market equilibrium. Such a distortion might arise from the existence of nonmarket values for the production of relatively high-cost farmers in the government's objective. Copyright 2000, Oxford University Press.

Date: 2000
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:82:y:2000:i:1:p:14-24

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