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Modelling of Agricultural Behavior under the CAP Regime: Policy Effectiveness and Design

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Author Info

  • Constadina Passa

    ()
    (Department of Economics, University of Crete, Greece)

  • Anastasios Xepapadeas

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

The paper discusses the design of optimal regulatory policies under an alternative analytical framework of unbounded and bounded rationality, by considering the mechanism that provides the type of the optimal CAP instruments that ensure the collective attainment of a social environmental target, along with the type of interdependence characterizing them. The problem of the optimal regulation of an unboundedly rational population of farmers is discussed in both a static and a dynamic context. The long-run viability of the Agenda 2000 CAP reform is also examined under the assumption of bounded rationality by employing the evolutionary framework of replicator dynamics. Analysis indicated that.it may be socially desirable on environmental grounds not only to maintain coupled payments but also to impose on farmers a set of charges on the various aspects of farming activity.

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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 0819.

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Length: 26 pages
Date of creation: 10 Dec 2007
Date of revision: 01 Jul 2008
Handle: RePEc:crt:wpaper:0819

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Keywords: production subsidy; direct payment; cross-compliance principle; optimal regulation; unbounded rationality; bounded rationality; replicator dynamics.;

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  1. JunJie Wu & Bruce A. Babcock, 1996. "Spatial Heterogeneity and the Choice of Instruments to Control Nonpoint Pollution," Center for Agricultural and Rural Development (CARD) Publications 96-wp164, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Anastasios Xepapadeas & Constadina Passa, 2005. "Design of Public Voluntary Environmental Programs for Nitrate Pollution in Agriculture: An Evolutionary Approach," Working Papers 0512, University of Crete, Department of Economics.
  3. Joïlle Noailly & Jeroen C.J.M. van den Bergh & Cees A. Withagen, 2003. "Evolution of harvesting strategies: replicator and resource dynamics," Journal of Evolutionary Economics, Springer, vol. 13(2), pages 183-200, 04.
  4. Xepapadeas, A. P., 1995. "Observability and choice of instrument mix in the control of externalities," Journal of Public Economics, Elsevier, vol. 56(3), pages 485-498, March.
  5. Fennell, Rosemary, 1997. "The Common Agricultural Policy: Continuity and Change," OUP Catalogue, Oxford University Press, number 9780198288572.
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