Agricultural and Food Policy by Bruce L. Gardner and Gordon C. Rausser (Eds.)

By Bruce L. Gardner and Gordon C. Rausser (Eds.)

The subject material of agricultural economics has either broadened and deepened and the chapters of this guide current cutting edge paintings within the box. This quantity includes half five of the instruction manual on ''agricultural and foodstuff policy'' and follows on from quantity 2A which has chapters on ''agriculture, ordinary assets and the environment'' and ''agriculture within the macroeconomy''. even though agricultural economists have consistently paid awareness to those themes, examine dedicated to them has elevated considerably in scope in addition to intensity in recent times

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S. James is the actual demand elasticity (in absolute value terms). Similarly, the effects of introducing a quota on one input, X1, can be analyzed by making the effective supply of that factor perfectly inelastic (el = 0) and defining the displacement as a quantity shift b y / ~ = -31 (where ~1 is the proportional reduction from the competitive solution) so that (ld ~) becomes din X1 = -31. The last two columns in Table 3 show the effects of a quota that reduces output by a fraction 3Q, and a quota that reduces the quantity of X1 by a fraction 3l, respectively.

Evidence about policy risk has been inferred by some from the rates of capitalization of quota rents into quota asset prices. For instance, Lermer and Stanbury (1985) estimated that costs of policy risk offset half or more of potential producer benefits from supply management for eggs, broilers, and turkeys in Canada. Lermer and Stanbury (1985) attributed all of the premium in the quota rental rate (rents as a percentage of the quota value), above a risk-free rate of return, to diversifiable risk, which would not exist if quota were held in fully diversified portfolios; hence, it represents an unnecessary cost of "insurance" against loss of the quota income stream.

24 B arichello and Cunningham-Dunlop (1987) documented comprehensively the nature of the restrictions on quota ownership and transfer in Canadian agriculture and the sources of efficiency loss that they entailed. The efficiency loss resulting from restrictions on quota transfer has been the subject of several empirical studies, but has been more often ignored in both theoretical and empirical analysis of quotas in agriculture. Alston (1986) estimated that limits on transferability of hen quota increased the costs of producing eggs in Victoria, Australia, by approximately 20 percent.

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