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Home bias in preferences and the political economics of agricultural protection

Author

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  • Clas Eriksson

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

Abstract

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.

Suggested Citation

  • Clas Eriksson, 2011. "Home bias in preferences and the political economics of agricultural protection," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement, INRA Department of Economics, vol. 92(1), pages 5-23.
  • Handle: RePEc:rae:jourae:v:92:y:2011:i:1:p:5-23
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    References listed on IDEAS

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    Cited by:

    1. Moritz Bosbach & Ornella Wanda Maietta & Hannah Marquardt, 2015. "Domestic Food Purchase Bias: A Cross-Country Case Study of Germany, Italy and Serbia," CSEF Working Papers 409, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

    More about this item

    Keywords

    agriculture; trade; home bias; tariff; subsidy;

    JEL classification:

    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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