IDEAS home Printed from https://ideas.repec.org/a/caa/jnlage/v58y2012i11id212-2011-agricecon.html
   My bibliography  Save this article

Microeconomic aspects of government subsidies in the agricultural market

Author

Listed:
  • Lucie SEVEROVÁ

    (Department of Economic Theories, Faculty of Economics and Management, Czech University of Life Sciences Prague, Prague, Czech Republic)

  • Jan CHROMÝ

    (Department of Marketing and Media Communication, Institute of Hospitality Management, Czech Republic)

  • Bohuslav SEKERKA

    (Department of Economic Theories, Faculty of Economics and Management, Czech University of Life Sciences Prague, Prague, Czech Republic)

  • Alexandr SOUKUP

    (Department of Economic Theories, Faculty of Economics and Management, Czech University of Life Sciences Prague, Prague, Czech Republic)

Abstract

It is known from the Czech practice that a very actual problem of economic policy is created by the subsidies on the prices of agricultural products. A price subsidy of agricultural product causes the price to be kept above its equilibrium level. We will use the microeconomic knowledge about the behaviour of average and marginal costs curves in the short-run and long-run. We assume two agricultural firms in a perfect competition market. The agricultural large-scale company reaches a normal profit, but the small family firm has higher costs, therefore it runs at a loss. Using the subsidy can ensure that the prices of agricultural products are set at a level, at which the farmers have appropriate incomes. However, a loss of efficiency can occur because of the subsidy as the surplus, which is purchased by the government, and actually stays unused.

Suggested Citation

  • Lucie SEVEROVÁ & Jan CHROMÝ & Bohuslav SEKERKA & Alexandr SOUKUP, 2012. "Microeconomic aspects of government subsidies in the agricultural market," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 58(11), pages 542-548.
    • Handle: RePEc:caa:jnlage:v:58:y:2012:i:11:id:212-2011-agricecon
    DOI: 10.17221/212/2011-AGRICECON
    as

    Download full text from publisher

    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/212/2011-AGRICECON.html
    Download Restriction: free of charge
    File URL: http://agricecon.agriculturejournals.cz/doi/10.17221/212/2011-AGRICECON.pdf
    Download Restriction: free of charge
    File URL: https://libkey.io/10.17221/212/2011-AGRICECON?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Alexandr SOUKUP & Karel ŠRÉDL, 2011. "Space Model in monopolistic competition - analysis of international trade," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 57(4), pages 169-174.
    2. Robert T. Jensen & Nolan H. Miller, 2011. "Do Consumer Price Subsidies Really Improve Nutrition?," The Review of Economics and Statistics, MIT Press, vol. 93(4), pages 1205-1223, November.
    3. Diego F. Angel‐Urdinola & Quentin Wodon, 2012. "Does increasing access to infrastructure services improve the targeting performance of water subsidies?," Journal of International Development, John Wiley & Sons, Ltd., vol. 24(1), pages 88-101, January.
    4. Just, Richard E & Zilberman, David, 1983. "Stochastic Structure, Farm Size and Technology Adoption in Developing Agriculture," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 307-328, July.
    5. repec:dau:papers:123456789/11783 is not listed on IDEAS
    6. Bohnstedt, Anna & Schwarz, Christian & Suedekum, Jens, 2012. "Globalization and strategic research investments," Research Policy, Elsevier, vol. 41(1), pages 13-23.
    7. David Coady, 2004. "Targeting Outcomes Redux," The World Bank Research Observer, World Bank, vol. 19(1), pages 61-85.
    8. Feder, Gershon, 1980. "Farm Size, Risk Aversion and the Adoption of New Technology under Uncertainty," Oxford Economic Papers, Oxford University Press, vol. 32(2), pages 263-283, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Karel ZEMAN & Jan HRON, 2018. "The agricultural sector has the most efficient management of state receivables in the Czech Republic," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 64(2), pages 61-73.
    2. Jan SIROKY & Jirina KRAJCOVA & Jana HAKALOVA, 2016. "The taxation of agricultural land with the use of multi-criteria analysis," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(5), pages 197-204.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Evan J. Miller-Tait & Sandeep Mohapatra & M. K. (Marty) Luckert & Brent M. Swallow, 2019. "Processing technologies for undervalued grains in rural India: on target to help the poor?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 11(1), pages 151-166, February.
    2. Bellon, Mauricio R & Taylor, J Edward, 1993. ""Folk" Soil Taxonomy and the Partial Adoption of New Seed Varieties," Economic Development and Cultural Change, University of Chicago Press, vol. 41(4), pages 763-786, July.
    3. Doan Nainggolan & Faizal Rahmanto Moeis & Mette Termansen, 2023. "Does risk preference influence farm level adaptation strategies? – Survey evidence from Denmark," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 28(7), pages 1-23, October.
    4. Chibwana, Christopher & Fisher, Monica & Shively, Gerald, 2012. "Cropland Allocation Effects of Agricultural Input Subsidies in Malawi," World Development, Elsevier, vol. 40(1), pages 124-133.
    5. Mensah, Edouard R. & Kostandini, Genti, 2020. "The inverse farm size-productivity relationship under land size mis-measurement and in the presence of weather and price risks: Panel data evidence from Uganda," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304477, Agricultural and Applied Economics Association.
    6. Murat Isik & Madhu Khanna, 2003. "Stochastic Technology, Risk Preferences, and Adoption of Site-Specific Technologies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(2), pages 305-317.
    7. Ott, Ingrid & Papilloud, Christian & Zülsdorf, Torben, 2008. "What drives innovation? Causes of and Consequences for nanotechnologies," Kiel Working Papers 1455, Kiel Institute for the World Economy (IfW Kiel).
    8. Elaine Meichen Liu, 2008. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," Working Papers 1064, Princeton University, Department of Economics, Industrial Relations Section..
    9. Awel Y. & Azomahou T.T., 2015. "Risk preference or financial literacy? Behavioural experiment on index insurance demand," MERIT Working Papers 2015-005, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    10. Barham, Bradford & Carter, Michael R. & Sigelko, Wayne, 1995. "Agro-export production and peasant land access: Examining the dynamic between adoption and accumulation," Journal of Development Economics, Elsevier, vol. 46(1), pages 85-107, February.
    11. Alcon, Francisco & De Miguel, María Dolores & Burton, Michael P., 2008. "Adopción de tecnología de distribución y control del agua en las Comunidades de Regantes de la Región de Murcia," Economia Agraria y Recursos Naturales, Spanish Association of Agricultural Economists, vol. 8(01), pages 1-19.
    12. Paul Diederen & Hans Van Meijl & Arjan Wolters & Katarzyna Bijak, 2003. "Innovation adoption in agriculture : innovators, early adopters and laggards," Cahiers d'Economie et Sociologie Rurales, INRA Department of Economics, vol. 67, pages 29-50.
    13. Kim, Tae-Kyun, 1989. "The factor bias of technical change and technology adoption under uncertainty," ISU General Staff Papers 1989010108000010138, Iowa State University, Department of Economics.
    14. Chen, Ruijian & Huang, Jikun & Qiao, Fangbin, 2013. "Farmers' knowledge on pest management and pesticide use in Bt cotton production in china," China Economic Review, Elsevier, vol. 27(C), pages 15-24.
    15. Dimara, Efthalia & Skuras, Dimitrios, 1998. "Adoption of new tobacco varieties in Greece: Impacts of empirical findings on policy design," Agricultural Economics, Blackwell, vol. 19(3), pages 297-307, December.
    16. Prisca Koncy Fosso & Roger Tsafack Nanfosso, 2016. "Adoption of agricultural innovations in risky environment: the case of corn producers in the west of Cameroon," Review of Agricultural, Food and Environmental Studies, Springer, vol. 97(1), pages 51-62, June.
    17. Michael Livingston & Michael J. Roberts & Yue Zhang, 2015. "Optimal Sequential Plantings of Corn and Soybeans Under Price Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(3), pages 855-878.
    18. Elaine M. Liu, 2013. "Time to Change What to Sow: Risk Preferences and Technology Adoption Decisions of Cotton Farmers in China," The Review of Economics and Statistics, MIT Press, vol. 95(4), pages 1386-1403, October.
    19. Marc Baudry & Edouard Civel & Camille Tévenart, 2023. "Land allocation and the adoption of innovative practices in agriculture: a real option modelling of the underlying hidden costs," EconomiX Working Papers 2023-1, University of Paris Nanterre, EconomiX.
    20. Jean-Louis Fusillier & Lionel Richefort, 2010. "Imitation, rationalité et adoption de technologies d’irrigation améliorées à l’île de la Réunion," Économie et Prévision, Programme National Persée, vol. 193(2), pages 59-73.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:caa:jnlage:v:58:y:2012:i:11:id:212-2011-agricecon. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Ivo Andrle (email available below). General contact details of provider: https://www.cazv.cz/en/home/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.