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Abstract

Aiming to stimulate the role of agriculture as provider of public goods, the new CAP reform raises many theoretical and practical questions. The most relevant ones concern farmers’ response to the policy instruments. This paper uses a formal model to analyse the incentives and constraints generated by policy instruments and their potential impact on farmers’ participation decision. The analysis shows that, when choosing policy instruments to stimulate provision of public good, it is important to take into account different degrees and mechanisms of jointness between commodity and non-commodity (potentially public good) production, as they can enhance or erode the desired effect of the policy instruments. Some implications for modelling and policy analysis are discussed.

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