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Subsidy Incidence in Agricultural Land Markets: An Experimental Investigation

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  • Nagler, Amy M.
  • Menkhaus, Dale J.
  • Bastian, Christopher T.
  • Ehmke, Mariah D.

Abstract

We use laboratory market experiments to control for market power and social norms in order to evaluate market outcomes associated with subsidy incidence. We estimate the incidence of a stylized agricultural subsidy in laboratory land rental negotiations and compare the market behavior of university students to agricultural professionals. In separate sessions with both subject groups, 21.5 percent of a per-unit subsidy paid to the buyer (tenant) was passed on to sellers (landlords). The consistent treatment effect between students and professionals is encouraging, particularly in the use of experimental laboratory methods for ex ante analyses of agricultural policy impacts.

Suggested Citation

  • Nagler, Amy M. & Menkhaus, Dale J. & Bastian, Christopher T. & Ehmke, Mariah D., 2011. "Subsidy Incidence in Agricultural Land Markets: An Experimental Investigation," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103032, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea11:103032
    DOI: 10.22004/ag.econ.103032
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    Keywords

    Agricultural and Food Policy; Institutional and Behavioral Economics;

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