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Optimal Policy for Organic Farming Conversion

Author

Listed:
  • Christian At
  • Daniel Gilbert
  • Lionel Thomas

Abstract

This paper determines the optimal subsidy for organic conversion distributed by a regulator to farmers under adverse selection. We consider that a farmer is characterized by an intrinsic motivation about organic farming that is private information. We find that the optimal subsidy is constant along the farmers? revenue. As the gap between profits in organic and traditional farming narrows, the optimal subsidy should decrease. While promoting organic farming to improve its acceptability for society has a positive influence on the proportion of land converted, we show that promoting both organic farming among farmers and the demand for organic products has ambiguous effects that can lead to a decrease in the number of conversions. JEL codes . D82, O13, Q18

Suggested Citation

  • Christian At & Daniel Gilbert & Lionel Thomas, 2023. "Optimal Policy for Organic Farming Conversion," Revue d'économie politique, Dalloz, vol. 133(1), pages 105-118.
    • Handle: RePEc:cai:repdal:redp_331_0105
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    Keywords

    Organic conversion; adverse selection;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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