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Agricultural subsidy with capacity constraints and demand elasticity

Author

Listed:
  • You-Hua CHEN

    (College of Economics and Management, South China Agricultural University, Guangzhou, P.R. China
    Guangdong Centre for Rural Economic Studies, South China Agricultural University, Guangzhou, P.R. China)

  • Jun-Yi WAN

    (College of Economics and Management, South China Agricultural University, Guangzhou, P.R. China)

  • Chan WANG

    (Institute of Industrial Economics, Jinan University, Guangzhou, P.R. China)

Abstract

Agricultural subsidy has attracted more and more attention. This paper captures the effects of subsidy (including area subsidy and price subsidy) on the total sown areas of crops based on the assumption that subsidy has both stimulating effects and inhibiting effects. Different from the prior studies, this paper considers the impacts of the farmland constraint and demand elasticity and some interesting conclusions are achieved. Firstly, a stimulating effect increases crop sown areas while an inhibiting effect reduces them. Secondly, the output efficiency of farmland as well as the demand elasticity has a major impact on the government subsidy. Besides, the capacity constraint makes thing difference and the government should choose between the areas subsidy and price subsidy under different conditions. Finally, this paper offers an empirical test on the conclusions by adopting the Chinese agricultural statistical data.

Suggested Citation

  • You-Hua CHEN & Jun-Yi WAN & Chan WANG, 2015. "Agricultural subsidy with capacity constraints and demand elasticity," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 61(1), pages 39-49.
    • Handle: RePEc:caa:jnlage:v:61:y:2015:i:1:id:60-2014-agricecon
    DOI: 10.17221/60/2014-AGRICECON
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    References listed on IDEAS

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    Cited by:

    1. Kaixing Huang & Wenshou Yan & Jikun Huang, 2020. "Agricultural subsidies retard urbanisation in China," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1308-1327, October.
    2. Vladimir ZITEK & Viktorie KLIMOVA, 2016. "Peripheral innovation systems in the Czech Republic at the level of the NUTS3 regions," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 62(6), pages 260-268.
    3. You-Hua CHEN & Pu-Yan NIE & Yong-Cong YANG, 2017. "Effects of corporate social responsibility on food safety," Agricultural Economics, Czech Academy of Agricultural Sciences, vol. 63(12), pages 539-547.

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