Insuring the Stewardship of Bt Corn: A Carrot Versus a Stick
AbstractWe compare subsidies and fines to voluntary and mandatory refuge insurance (insurance for pest damage on Bt corn refuge) as mechanisms for securing grower compliance with EPA refuge mandates. A conceptual model partially ranks mechanisms. We empirically quantify tradeoffs between mechanisms using grower welfare, payments to growers, and monitoring frequency. Grower welfare is lowest with mandatory insurance, since growers pay all costs, and highest with direct refuge subsidies, since public funds or companies subsidize all costs. Assuming typical premium loads and ignoring distribution considerations, we develop monitoring budgets for fines and subsidies, above which voluntary or mandatory insurance is better. Key words: biotechnology, European corn borer, refuge insurance, resistance management
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10073.
Date of creation: 01 Jan 2002
Date of revision:
Publication status: Published in Journal of Agricultural and Resource Economics 2002, vol. 27, pp. 390-405
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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- Mitchell, Paul D. & Hurley, Terrance M. & Babcock, Bruce A. & Hellmich, Richard L., 2002. "Insuring The Stewardship Of Bt Corn: 'A Carrot' Versus 'A Stick'," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(02), December.
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