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Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions

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  • Just, David R.
  • Kropp, Jaclyn D.

Abstract

The use of agricultural decoupled support has increased as World Trade Organization (WTO) member nations implement less trade distortive policies. However, the true production effects of these policies are still unclear. We show how the exclusion restrictions of U.S. direct payments, namely, the fruit and vegetable restriction and the requirement of keeping land in good agricultural use, cause the decoupled payment to become fully coupled over time as relative profits adjust. Theoretically, decoupled payments can be more trade distorting than an equivalent (same level of taxpayer expenditure) fully coupled subsidy.

Suggested Citation

  • Just, David R. & Kropp, Jaclyn D., 2009. "Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49158, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea09:49158
    DOI: 10.22004/ag.econ.49158
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    References listed on IDEAS

    as
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    Cited by:

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    Keywords

    Agricultural and Food Policy; International Relations/Trade; Land Economics/Use;
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