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Information, incentives, and the design of agricultural policies

In: Handbook of Agricultural Economics

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  • Chambers, Robert G.

Abstract

This chapter surveys studies that have used the methods of mechanism design, optimal taxation, nonlinear pricing, and principal-agent analyses in the analysis of agricultural policy. The optimal design and reform of agricultural policy are studied under the presumption that agricultural producers are better informed about their technology or their actions than agricultural policy makers. The existence of these information asymmetries creates incentive problems that must be tackled in the design of an optimal agricultural policy. Two basic types of information asymmetries are studied, those associated with hidden knowledge and those with hidden action. Hidden knowledge occurs when the farmer has exact information about his technology, but the regulator does not. Hidden action occurs when only the farmer has exact information on the conditions, including the state of Nature and the farmer's actions, under which production takes place.

Suggested Citation

  • Chambers, Robert G., 2002. "Information, incentives, and the design of agricultural policies," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 34, pages 1751-1825, Elsevier.
  • Handle: RePEc:eee:hagchp:4-34
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    Citations

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    Cited by:

    1. Feng, Hongli, 2007. "Green payments and dual policy goals," Journal of Environmental Economics and Management, Elsevier, vol. 54(3), pages 323-335, November.
    2. Canton, Joan & De Cara, Stéphane & Jayet, Pierre-Alain, 2009. "Agri-environmental schemes: Adverse selection, information structure and delegation," Ecological Economics, Elsevier, vol. 68(7), pages 2114-2121, May.
    3. White, Benedict & Raguragavan, Jananee & Chambers, Robert G., 2007. "Agri-environmental Regulation on the Back of a Data Envelopment Analysis," 81st Annual Conference, April 2-4, 2007, Reading University, UK 7963, Agricultural Economics Society.
    4. Mallawaarachchi, Thilak & Auricht, Christopher & Loch, Adam & Adamson, David & Quiggin, John, 2020. "Water allocation in Australia’s Murray–Darling Basin: Managing change under heightened uncertainty," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 345-369.
    5. Raguragavan, Jananee & White, Ben & Chambers, Robert C., 2006. "Contracts for Land Retirement under Asymmetric Information," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 174722, Australian Agricultural and Resource Economics Society.
    6. Bourgeon, Jean-Marc, 2002. "The Common Tragedy of Regulations," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24819, European Association of Agricultural Economists.

    More about this item

    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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