By Bruce L. Gardner and Gordon C. Rausser (Eds.)
The subject material of agricultural economics has either broadened and deepened and the chapters of this instruction manual current leading edge paintings within the box. This quantity includes half five of the instruction manual on ''agricultural and foodstuff policy'' and follows on from quantity 2A which has chapters on ''agriculture, normal assets and the environment'' and ''agriculture within the macroeconomy''. even if agricultural economists have continuously paid realization to those subject matters, learn dedicated to them has elevated considerably in scope in addition to intensity lately
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In addition, producers will likely intensify their use of other inputs, so that production is greater than it would have been if input proportions had remained unchanged. In the longer run, new varieties or production technologies may be adopted in order to increase output given the input restriction. All of these effects reduce the effectiveness of an input quota in restricting output, a phenomenon often referred to as "slippage". With acreage controls, slippage is manifested in yield increases.
If it is not zero, output is reduced by a smaller proportion than land is, and in order to achieve a given effect on output, an even tighter restriction on the input is necessary. Some studies have found slippage to be quite substantial. The combination of acreage restrictions with price supports may have encouraged the adoption of varieties and cultural practices that increased yield at the expense of quality, as noted by Brandow (1977, pp. 258). For instance, Foster and Babcock (1990, 1993) estimated that the use of acreage allotments for tobacco had a very significant effect on both the level and the growth rate of tobacco yields, as was shown after the switch to poundage (marketing) quotas in 1965, when yields fell by 12 percent.
That is, if the objective of a policy were to transfer income to suppliers of X1, an efficient policy would be to combine an input quota on X1 (set so its marginal cost per dollar of benefit to the input suppliers is 1 ÷ 8) with a subsidy on X1. The effects of combining an output subsidy with an input quota, a common policy in the United States, can be seen by combining the elements in the first and last columns of Table 3. The elements in the first column have to be adjusted to reflect the fixed supply of land, by setting el = 0, before they are added to the elements in the last column.
Agricultural and Food Policy by Bruce L. Gardner and Gordon C. Rausser (Eds.)