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Costly (Dis)Agreement: Optimal Intervention, Income Redistribution, and Transfer Efficiency of Output Quotas in the Presence of Cheating

Author

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  • Giannakas Konstantinos

    (Department of Agricultural Economics, University of Nebraska-Lincoln, Lincoln, Nebraska, USA)

  • Fulton Murray

    (Department of Agricultural Economics, University of Saskatchewan, Saskatoon, SK, Canada)

Abstract

This study builds on previous work by Giannakas and Fulton (2003, 2000) on the economics of output quotas in the presence of cheating by examining the efficiency of the policy in transferring income to producers as well as the optimal regulatory response to enforcement costs and farmer noncompliant behavior in a decentralized policy making environment. Analytical results show that enforcement costs and cheating change the transfer efficiency of output quotas, the level of intervention that transfers a given surplus to producers, the socially optimal income redistribution, and the social welfare from intervention. The incidence of the policy is shown to depend on the relative political preferences of the policy makers and the policy enforcers making the consideration of the decentralized policy making structure critical in analyzing output quotas in the presence of cheating.

Suggested Citation

  • Giannakas Konstantinos & Fulton Murray, 2003. "Costly (Dis)Agreement: Optimal Intervention, Income Redistribution, and Transfer Efficiency of Output Quotas in the Presence of Cheating," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 1(1), pages 1-14, March.
    • Handle: RePEc:bpj:bjafio:v:1:y:2003:i:1:n:11
    DOI: 10.2202/1542-0485.1029
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    References listed on IDEAS

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    1. Konstantinos Giannakas & Murray Fulton, 2000. "Efficient Redistribution Using Quotas and Subsidies in the Presence of Misrepresentation and Cheating," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 347-359.
    2. Bruce Gardner, 1983. "Efficient Redistribution through Commodity Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 225-234.
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    Cited by:

    1. Lucio Biggiero & Enrico Sevi, 2009. "Opportunism by cheating and its effects on industry profitability. The CIOPS model," Computational and Mathematical Organization Theory, Springer, vol. 15(3), pages 191-236, September.
    2. Konstantinos Giannakas, 2003. "Economics of export subsidies under costly and imperfect enforcement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 541-562, December.

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