Farm Subsidy Incidence in the Presence of Bertrand Competitors of Complementary Factors of Production: A Theoretical Approach

Abby Poe, Kalyn Coatney (), Keith Coble and Matt Freeman

No 162507, 2014 Annual Meeting, February 1-4, 2014, Dallas, Texas from Southern Agricultural Economics Association

Abstract: We analyze the impact of various subsidy policies using a two-stage dynamic game between a buyer (intended beneficiary) and two Bertrand suppliers of technical complementary inputs. Though we identify market power is one of the root causes of subsidy incidence, we also find that input product substitutability plays a much larger role. Furthermore, we identify that subsidy incidence occurs across multiple input markets. However, the multiplier effect of the subsidy enhances sector welfare, though disproportionally in favor of the input suppliers.

Keywords: Agricultural and Food Policy; Industrial Organization; Political Economy (search for similar items in EconPapers)
Pages: 28
Date: 2014
New Economics Papers: this item is included in nep-com and nep-gth
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea14:162507

DOI: 10.22004/ag.econ.162507

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