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Home bias in preferences and the political economics of agricultural protection

  • Clas Eriksson

    (Malardalen University College, P.O. Box 883, S-721 23 Västerås, Sweden)

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    Some consumers are willing to pay extra for food if it is of domestic origin. This paper theoretically examines the consequences of such home biased behavior for agricultural policy, assuming that the policy is decided by the median voter. The analysis is conducted in the framework of a small open economy, with a Ricardian production structure. Consumers differ with respect to how much extra they are willing to pay for a domestically produced agricultural good. For a tariff we find that, if there would be some home biased choices (no matter how few) in a laissez-faire regime, the political equilibrium will imply a strictly positive tariff. This tariff is high if the productivity in the agricultural sector of this country is low. A political equilibrium with a strictly positive subsidy requires stronger home bias than a tariff.

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    File URL: http://ageconsearch.umn.edu/bitstream/189336/2/92%20%281%29%2c%205-23.pdf
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    Article provided by INRA Department of Economics in its journal Review of Agricultural and Environmental Studies.

    Volume (Year): 92 (2011)
    Issue (Month): 1 ()
    Pages: 5-23

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    Handle: RePEc:rae:jourae:v:92:y:2011:i:1:p:5-23
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    1. Rakhal Sarker & Karl Meilke & Michael Hoy, 1993. "The Political Economv of Svstematic Government Intervention in Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 41(3), pages 289-309, November.
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    7. Beghin, John C. & Kherallah, Mylene, 1994. "Political Institutions and International Patterns of Agricultural Protection," Staff General Research Papers 1602, Iowa State University, Department of Economics.
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    13. Alessandro Olper & Valentina Raimondi, 2007. "Market access asymmetry in food trade," LICOS Discussion Papers 18707, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    14. Lopez, Rigoberto A. & Pagoulatos, Emilio & Gonzalez, Maria A., 2006. "Home bias and U.S. imports of processed food products," The North American Journal of Economics and Finance, Elsevier, vol. 17(3), pages 363-373, December.
    15. Ehmke, Mariah D., 2006. "International Differences in Consumer Preferences for Food Country-of-Origin: A Meta-Analysis," 2006 Annual meeting, July 23-26, Long Beach, CA 21193, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Frode Alfnes & Kyrre Rickertsen, 2003. "European Consumers' Willingness to Pay for U.S. Beef in Experimental Auction Markets," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 396-405.
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