Supply response to countercyclical payments and base acre updating under uncertainty: an experimental study
2007 (English)In: American Journal of Agricultural Economics, ISSN 0002-9092, E-ISSN 1467-8276, Vol. 89, no 4, 1046-1057 p.Article in journal (Refereed) PublishedText
We design an experiment to simulate how people make agricultural production decisions under three policy scenarios, each incorporating direct payments (DPs): (a) price uncertainty without countercyclical payments (CCPs); (b) price uncertainty with CCPs; and (c) price uncertainty, CCPs, and uncertainty regarding base acreage updating. Results are the CCP program and perceived possibility of future base updating created incentives for subjects to invest more in program (base) crops, despite payments being decoupled from current production decisions. Those choosing to reduce revenue risk by increasing plantings of base crops may face reduced incomes, suggesting the efficiency of crop markets may be diminished.
Place, publisher, year, edition, pages
Oxford: Blackwell Publishing, 2007. Vol. 89, no 4, 1046-1057 p.
base acreage, countercyclical payments, experiments, risk
Environmental Sciences related to Agriculture and Land-use Economics and Business
IdentifiersURN: urn:nbn:se:umu:diva-118183DOI: 10.1111/j.1467-8276.2007.01011.xISI: 000249825200016OAI: oai:DiVA.org:umu-118183DiVA: diva2:920656