Abstract

The size of the insurance and wealth effects of a change in the Common Agricultural Policy (CAP) for arable crops is estimated. The impact of price uncertainty is accounted for in the specific decisionmaking structure of the European Union (EU) arable crop producers under nonlinear mean-variance risk preferences. A system of output supply, input demand, and land allocation equations is estimated on a sample of Italian specialized arable crop farms. The simulation of the impact of the recent reforms confirms that farmers’ output responses are consistently affected by the size of the insurance and wealth effects.
Original languageEnglish
Pages (from-to)43-56
Number of pages14
JournalAmerican Journal of Agricultural Economics
DOIs
Publication statusPublished - 2006

Keywords

  • CAP
  • duality
  • production analysis
  • uncertainty

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