Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions
David Just and
Jaclyn D. Kropp
No 49158, 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin from Agricultural and Applied Economics Association
The use of agricultural decoupled support has increased as World Trade Organization (WTO) member nations implement less trade distortive policies. However, the true production effects of these policies are still unclear. We show how the exclusion restrictions of U.S. direct payments, namely, the fruit and vegetable restriction and the requirement of keeping land in good agricultural use, cause the decoupled payment to become fully coupled over time as relative profits adjust. Theoretically, decoupled payments can be more trade distorting than an equivalent (same level of taxpayer expenditure) fully coupled subsidy.
Keywords: Agricultural and Food Policy; International Relations/Trade; Land Economics/Use (search for similar items in EconPapers)
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