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The Goals of U.S. Agricultural Policy: A Mechanism Design Approach

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  • Brent Hueth

Abstract

This article examines motivations underlying the government's choice of alternative policy mechanisms for subsidizing agriculture. Optimal policies are analyzed for three government objectives: one where the government wishes to ensure a minimum level of net income for all farmers, a second where the government's only concern is to transfer income from consumers and taxpayers to the farm sector, and a final “augmented” income-transfer objective. The analysis offers an explanation for agricultural policy mechanisms that involve overproduction by high-cost producers, relative to a free-market equilibrium. Such a distortion might arise from the existence of nonmarket values for the production of relatively high-cost farmers in the government's objective. Copyright 2000, Oxford University Press.

Suggested Citation

  • Brent Hueth, 2000. "The Goals of U.S. Agricultural Policy: A Mechanism Design Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 14-24.
    • Handle: RePEc:oup:ajagec:v:82:y:2000:i:1:p:14-24
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    File URL: http://hdl.handle.net/10.1111/0002-9092.00002
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    3. Larkin, Sherry L. & Keithly, Walter R., Jr. & Adams, Charles M. & Kazmierczak, Richard F., Jr., 2004. "Buyback Programs for Capacity Reduction in the U.S. Atlantic Shark Fishery," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 36(2), pages 1-16, August.
    4. Hervé Guyomard & Alexandre Gohin & Chantal Le Mouël, 2001. "Instruments de soutien interne des revenus agricoles, effets de distorsion sur les échanges et multifonctionnalité de l'agriculture," Post-Print hal-01937091, HAL.
    5. de Lima, Daruichi Pereira & Fioriolli, José Carlos & Padula, Antonio Domingos & Pumi, Guilherme, 2018. "The impact of Chinese imports of soybean on port infrastructure in Brazil: A study based on the concept of the “Bullwhip Effect”," Journal of Commodity Markets, Elsevier, vol. 9(C), pages 55-76.
    6. Bulut, Harun & Collins, Keith J., "undated". "Political Economy of Crop Insurance Risk Subsidies under Imperfect Information," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150577, Agricultural and Applied Economics Association.
    7. Gohin, Alexandre & Guyomard, Herve & Le Mouel, Chantal, 2001. "Promoting Multifunctionality While Minimizing Trade Distortion Effects: The Relative Merits Of Traditional Policy Instruments," 2001 Annual meeting, August 5-8, Chicago, IL 20468, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Bontems, Philippe, 2008. "On the optimal design of income support and agri-environmental regulation," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6246, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Crepin, Anne-Sophie, 2005. "Incentives for wetland creation," Journal of Environmental Economics and Management, Elsevier, vol. 50(3), pages 598-616, November.
    10. Richardson, James W. & Outlaw, Joe L., 2017. "The role of U.S. Safety net programs in incentivizing farm growth: a simulation approach," 21st Congress, Edinburgh, Scotland, July 2-7, 2017 345821, International Farm Management Association.
    11. Bulut, Harun, 2017. "Managing Catastrophic Risk in Agriculture through Ex Ante Subsidized Insurance or Ex Post Disaster Aid," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 42(3), September.
    12. Herve Guyomard & Fabrice Levert, 2001. "Multifunctionality, trade distortion effects and agricultural income support : a conceptual framework with free entry and land price endogeneity," Post-Print hal-01593996, HAL.

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