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Firm-Level Evidence Of Deadweight Loss Of Investment Support Policies: A Case Study Of Dairy Farms In Schleswig-Holstein

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  • Michalek, Jerzy
  • Ciaian, Pavel
  • Kancs, d'Artis

Abstract

The main objective of the present study is to estimate the extent to which the RDP investment support has a complementary or a substitutionary effect on farm investments. In order to answer this question, we attempt to quantify the potential deadweight loss by estimating the extent to which the RDP beneficiaries would have undertaken comparable investments also without the investment support. We find that the deadweight loss of the RDP is close to 100%, implying that firm investment would have been undertaken also without the support. These results suggest that capital market distortions are not significant in Schleswig- Holstein. Similarly, no evidence was found that, due to programme support, farms would have brought forward their investments planned originally in a later period, suggesting no evidence of inter-temporal substitution of investments. These results are new, as the deadweight loss and its conditionality have not been studied in the context of the RDP in Germany before.

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Bibliographic Info

Paper provided by International Agricultural Trade Research Consortium in its series Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain with number 152257.

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Date of creation: Jun 2013
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Handle: RePEc:ags:iatr13:152257

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Related research

Keywords: Rural development policies; investment subsidy; crowding out; substitution effects; additionality; subsidy leverage; deadweight loss; propensity score matching; Agricultural and Food Policy; Community/Rural/Urban Development; International Relations/Trade; Public Economics;

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Cited by:
  1. Michalek, Jerzy & Ciaian, Pavel & Kancs, d'Artis, 2013. "Firm-Level Evidence of Deadweight Loss of Investment Support Policies: A Case Study of Dairy Farms in Schleswig-Holstein," Proceedings Issues, 2013: Productivity and Its Impacts on Global Trade, June 2-4, 2013. Seville, Spain 152258, International Agricultural Trade Research Consortium.
  2. Ratinger, T. & Medonos, T. & HrusÌŒka, M., 2013. "An Assessment of the Differentiated Effects of the Investment Support to Agricultural Modernisation: the Case of the Czech Republic," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 5(4), December.

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