Production Incentives from Static Decoupling: Entry, Exit and Use Exclusion Restrictions

The use of agricultural decoupled support has increased as World Trade Organization (WTO) member nations implement less trade distortive policies. However, the true production effects of these policies are still unclear. We show how the exclusion restrictions of U.S. direct payments, namely, the fruit and vegetable restriction and the requirement of keeping land in good agricultural use, cause the decoupled payment to become fully coupled over time as relative profits adjust. Theoretically, decoupled payments can be more trade distorting than an equivalent (same level of taxpayer expenditure) fully coupled subsidy.


Issue Date:
2009
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/49158
Total Pages:
24
JEL Codes:
Q15; Q17; Q18
Series Statement:
Selected Paper
613092




 Record created 2017-04-01, last modified 2017-08-25

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