Decoupled Programs, Payment Incidence, and Factor Markets: Evidence from Market Experiments

Christopher T. Bastian, Amy M. Nagler, Dale J. Menkhaus, Mariah Tanner Ehmke, James B. Whitaker and Chester Young

No 104108, 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania from Agricultural and Applied Economics Association

Abstract: We use laboratory market experiments to assess the impact of asymmetric knowledge of a per-unit subsidy and the effect of a decoupled annual income subsidy on factor market outcomes. Results indicate that when the subsidy is tied to the factor as a per-unit subsidy, regardless of full or asymmetric knowledge for market participants, subsidized factor buyers distribute nearly 22 percent of the subsidy to factor sellers. When the subsidy is fully decoupled from the factor, as is the case with the annual payment, payment incidence is mitigated and prices are not statistically different from the no-policy treatment.

Keywords: Agricultural and Food Policy; Institutional and Behavioral Economics (search for similar items in EconPapers)
Pages: 23
Date: 2011
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea11:104108

DOI: 10.22004/ag.econ.104108

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