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Price and tax policy for semi-subsistence agriculture in Ethiopia

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Author Info

  • Weaver, Robert D.
  • Shire, Saad Ali

Abstract

In the case of semi-subsistence agriculture where wage employment is not available, the role played by prices and taxes in determining production and consumption decisions is not clearly established by economic theories of household choice. This study demonstrates that where choices in production, consumption, and leisure can be made independently, farmers will decide what to grow on the basis of their preferences for marketed goods. The paper also points out that the choice will be affected by the level and type of taxation imposed. The paper shows the impact of four taxes -- agricultural revenue, land, production and marketed goods consumption -- on crop production and tax revenues. This paper also reports on a model of production in Ethiopia. The results of this study give strong evidence of the role of producer and consumer prices in semi-subsistence agriculture. In addition, the results show the importance of production capacity, household and climatic factors in agricultural development.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 67.

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Date of creation: 31 Aug 1988
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Handle: RePEc:wbk:wbrwps:67

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Related research

Keywords: Environmental Economics&Policies; Economic Theory&Research; Crops&Crop Management Systems; Agricultural Knowledge&Information Systems; Consumption;

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Cited by:
  1. Kidane, Asmerom & Abler, David G., 1994. "Production technologies in Ethiopian agriculture," Agricultural Economics: The Journal of the International Association of Agricultural Economists, International Association of Agricultural Economists, vol. 10(2), April.

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