A Two-Stage Model Of The Demand For Specialty Crop Insurance
AbstractRecent proposals to reform the federal Multiple-Peril Crop Insurance Program for specialty crops raised concerns that a higher cost for catastrophic-level coverage would significantly reduce program participation. This study estimates the demand for three levels of insurance coverage (50%, 65%, 75%) using aggregate data from grape production in 11 California counties from 1986-96. A discrete/continuous econometric model of the choice of coverage level and the amount of insurance finds that the price-elasticity of demand for 50% coverage is elastic, suggesting that premium increases may indeed reduce participation significantly. Such increases may also cause a significant reallocation of growers among coverage levels.
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Bibliographic InfoArticle provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.
Volume (Year): 25 (2000)
Issue (Month): 01 (July)
Risk and Uncertainty;
Other versions of this item:
- Richards, Timothy J., 1998. "A Two Stage Model of the Demand For Specialty Crop Insurance," Working Papers 28546, Arizona State University, Morrison School of Agribusiness and Resource Management.
- Knox, Lyle & Richards, Timothy J., 1999. "A Two-Stage Model Of The Demand For Specialty Crop Insurance," 1999 Annual meeting, August 8-11, Nashville, TN 21681, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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