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Abstract
In this paper I improve Gardner's surplus transformation curve framework by assuming that governments are
able to vary many policy instruments simultaneously instead of only one. I use my framework to find the combination
of the currently used instruments which provides the most efficient income redistribution for the Austrian bread
grains market. Comparing the most efficient policy with the actual policy reveals that 464 X 106 Austrian shillings
were wasted. I theoretically compare for a small country the transfer efficiency of every possible pair of the four
major agricultural policy instruments: floor price, (production) quota, co-responsibility levy, and deficiency payments.
Without considering the marginal cost of public funds (MCF), deficiency payments cum quota (equal to a fully
decoupled direct income support) is the most efficient policy, succeeded by floor price cum quota, and floor price
cum deficiency payments. If the MCF is taken into account, the ranking crucially depends on the market parameters,
the transfer level, and the value of the MCF. For the Austrian bread grains market, I empirically demonstrate that
given the present support level, a fully decoupled direct income support redistributes income most efficiently as long
as the MCF is lower than 1.17. Beyond this value a floor price cum quota policy becomes more efficient. A floor
price cum deficiency payments policy is never superior to the floor price cum quota.