Developing of Modelling Tool for Policy and Economic Rent in Agriculture

A. Bezat-Jarzębowska (), W. Rembisz and A. Sielska
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A. Bezat-Jarzębowska: Institute of Agricultural and Food Economics-National Research Institute (IAFE-NRI)
W. Rembisz: Institute of Agricultural and Food Economics-National Research Institute (IAFE-NRI)
A. Sielska: Institute of Agricultural and Food Economics-National Research Institute (IAFE-NRI)

Chapter Chapter 5 in Agricultural Cooperative Management and Policy, 2014, pp 87-107 from Springer

Abstract: Abstract In this chapter, a completely original microeconomic model of the producer’s choice is presented. To capture the impact of agricultural policy on the agricultural producer’s income two main sources of income growth were included in the model, namely efficiency of production (economic rent) and funds obtained from solutions under the CAP agricultural policy (policy rent). In this chapter, the micro-level (plant, animal, and mix production types) and macro-level agricultural data were used. The agricultural producer optimises his choices, i.e. reaches equilibrium when it comes to these two sources of income for the objective function (income maximising). Therefore, the purpose of the article was to show a certain range of substitution between these sources of producer’s revenue. We have observed that the rate of substitution of these two sources of income growth is not equal to one, which means that replacing one with the other is not without any effect on the level of income. We find it important to assess not only the substitution between the two sources of income which are in our case production efficiency and political rent, but also to study to what extent investment decisions (which create a basis for future income) depend on political rent.

Keywords: Agricultural Producer; Income Effect; Agricultural Policy; Rational Expectation; Income Growth (search for similar items in EconPapers)
Date: 2014
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DOI: 10.1007/978-3-319-06635-6_5

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