Efficient Redistribution Using Quotas and Subsidies in the Presence of Misrepresentation and Cheating

Konstantinos Giannakas () and Murray Fulton

American Journal of Agricultural Economics, 2000, vol. 82, issue 2, 347-359

Abstract: This paper introduces misrepresentation and cheating into the policy analysis of output quotas and subsidies. Analytical results show that when cheating occurs output quotas are a less efficient means of income redistribution than is traditionally believed. As well, cheating increases the transfer efficiency of output subsidies. The result is that an all-or-nothing choice between quotas and subsidies will generally favor the use of subsidies. A combination of quotas and subsidies, however, usually remains the most efficient means of income redistribution through market intervention. Copyright 2000, Oxford University Press.

Date: 2000
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