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Implications of a Production Entitlement Guarantee (PEG) Program for World Commodity Markets, 1992-2000


  • Patrick C. Westhoff
  • Michael D. Helmar
  • Deborah L. Stephens


A Production Entitlement Guarantee (PEG) program would replace existing agricultural policies with a program that would allow governments to subsidize only a fixed proportion of each farmer's historical production. World supply and demand conditions would determine the price farmers receive for any production in excess of the guaranteed PEG quality because all import barriers and export subsidies would be eliminated. A dynamic multicountry, multicommodity model is used to evaluate the impact of replacing current agricultural policies in the United States, the European Community, Japan, and Canada with a PEG program. For all countries and commodities, the guaranteed PEG quantity is set equal to 80 percent of each farmer's average production between 1985 and 1989. Government payments are made to farmers on their PEG production as partial compensation for revenue losses. Except for programs with environmental aims, all other programs that subsidize or protect domestic agriculture would be eliminated.

Suggested Citation

  • Patrick C. Westhoff & Michael D. Helmar & Deborah L. Stephens, 1992. "Implications of a Production Entitlement Guarantee (PEG) Program for World Commodity Markets, 1992-2000," Center for Agricultural and Rural Development (CARD) Publications 92-gatt3, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  • Handle: RePEc:ias:cpaper:92-gatt3

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    References listed on IDEAS

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    5. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
    6. Zusman, Pinhas, 1976. "The Incorporation and Measurement of Social Power in Economic Models," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 17(2), pages 447-462, June.
    7. Eggertsson,Thrainn, 1990. "Economic Behavior and Institutions," Cambridge Books, Cambridge University Press, number 9780521348911, March.
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