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Producer Welfare Consequences of Regulating Chemical Residues on Agricultural Crops: Maleic Hydrazide and Flue Cured Tobacco


  • Foster, William E.
  • Babcock, Bruce A.


A procedure is presented to calculate welfare consequences of chemical regulation from demand curves when input applications are unobserved, and is applied to maleic hydrazide and tobacco. The relationship between chemical residues and weather variables and prices is estimated, and from this the authors derive demand curves using an application-residue relationship estimated using research station data. Chemical price levels required to attain given regulatory goals are estimated. Yearly producer losses from a chemical ban range from $6 million to $14 million, two to five times greater than from a tax achieving a 95 percent assurance rate of residues falling below a proposed standard.

Suggested Citation

  • Foster, William E. & Babcock, Bruce A., 1991. "Producer Welfare Consequences of Regulating Chemical Residues on Agricultural Crops: Maleic Hydrazide and Flue Cured Tobacco," Staff General Research Papers Archive 10590, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:10590

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    Cited by:

    1. Lichtenberg, Erik, 2002. "Agriculture and the environment," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 2, chapter 23, pages 1249-1313 Elsevier.
    2. Lichtenberg, Erik & Zilberman, David, 2002. "Storage Technology And The Environment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 27(01), July.

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