A Least-Cost Mechanism to Achieve Agricultural Income and Conservation Targets under Asymmetric Information

Two policy goals dominate United States’ agricultural programs: voluntary land retirement for environmental purposes and countercyclical income support. Traditionally, these goals have been pursued with separate policies. This policy separation is efficient with perfect information regarding farm productivity. A more realistic assumption, however, is that farmers have better information regarding their own productivity than the government. The focus of the dissertation is to analyze least cost agricultural policy with this type of asymmetric information. I first use a mechanism design framework to show that it is optimal to have a combined income support-land retirement program rather than separate programs. For land retirement, farmers have an incentive…

Author: Sheriff, Glenn David

Source: University of Maryland

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