How to Design a Targeted Agricultural Subsidy System: Efficiency or Equity?

Rong-Gang Cong and Mark Brady

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper we appraise current agricultural subsidy policy in the EU. Several sources of its inefficiency are identified: it is inefficient for supporting farmers’ incomes or guaranteeing food security, and irrational transfer payments decoupled from actual performance that may be negative for environmental protection, social cohesion, etc. Based on a simplified economic model, we prove that there is ‘‘reverse redistribution’’ in the current tax-subsidy system, which cannot be avoided. To find a possible way to distribute subsidies more efficiently and equitably, several alternative subsidy systems (the pure loan, the harvest tax and the income contingent loan) are presented and examined.

Keywords: agricultural; economics (search for similar items in EconPapers)
JEL-codes: Q0 (search for similar items in EconPapers)
Date: 2012-08-02
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

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Journal Article: How to Design a Targeted Agricultural Subsidy System: Efficiency or Equity? (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:42481

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