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Optimal taxation with joint production of agriculture and rural amenities

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  • Casamatta, Georges
  • Rausser, Gordon C.
  • Simon, Leo K.

Abstract

We show that, when there is joint production of an agricultural good and rural amenities, the first-best allocation of resources can be implemented with a tax on the agricultural good and some subsidies on the production factors (land and labor). The use of a subsidy on the agricultural good can only be explained by the desire of the policymaker to redistribute income from the consumers to the farmers.

Suggested Citation

  • Casamatta, Georges & Rausser, Gordon C. & Simon, Leo K., 2008. "Optimal taxation with joint production of agriculture and rural amenities," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt0nv609hm, Department of Agricultural & Resource Economics, UC Berkeley.
    • Handle: RePEc:cdl:agrebk:qt0nv609hm
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    References listed on IDEAS

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    1. Jussi Lankoski & Markku Ollikainen, 2003. "Agri-environmental externalities: a framework for designing targeted policies," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 30(1), pages 51-75, March.
    2. David R. Harvey, 2003. "Agri‐environmental Relationships and Multi‐functionality: Further Considerations," The World Economy, Wiley Blackwell, vol. 26(5), pages 705-725, May.
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    4. Giovanni Anania & Mary E.. Bohman & Colin A. Carter & Alex F. McCalla (ed.), 2004. "Agricultural Policy Reform and the WTO," Books, Edward Elgar Publishing, number 3471.
    5. David Blandford & Richard N. Boisvert & Linda Fulponi, 2003. "Nontrade Concerns: Reconciling Domestic Policy Objectives with Freer Trade in Agricultural Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(3), pages 668-673.
    6. Ollikainen, Markku & Lankoski, Jussi E., 2005. "Multifunctional Agriculture: The Effect of Non-Public Goods on Socially Optimal Policies," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24611, European Association of Agricultural Economists.
    7. le Cotty, Tristan & Voituriez, Tancrede, 2003. "Multifunctionality And Non-Agricultural Supply Of Public Goods," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25850, International Association of Agricultural Economists.
    8. Blandford, David & Boisvert, Richard N., 2002. "Multifunctional Agriculture and Domestic/International Policy Choice," Estey Centre Journal of International Law and Trade Policy, Estey Centre for Law and Economics in International Trade, vol. 3(1), pages 1-13.
    9. Howard D. Leathers, 1991. "Allocable Fixed Inputs as a Cause of Joint Production: A Cost Function Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1083-1090.
    10. Jeffrey M. Peterson & Richard N. Boisvert & Harry de Gorter, 2002. "Environmental policies for a multifunctional agricultural sector in open economies," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 29(4), pages 423-443, December.
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    Cited by:

    1. Rongtian Zhang & Ming Chen, 2022. "Spatial Differentiation and Driving Mechanism of Agricultural Multifunctions in Economically Developed Areas: A Case Study of Jiangsu Province, China," Land, MDPI, vol. 11(10), pages 1-17, October.
    2. Boisvert, Richard N. & Blandford, David, 2011. "Meeting multiple policy objectives under GHG emissions reduction targets," Working Papers 126617, Cornell University, Department of Applied Economics and Management.
    3. Boisvert, Richard N. & Blandford, David, 2012. "Meeting multiple policy objectives under GHG emission reduction targets," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 135515, Agricultural Economics Society.
    4. C. Sayin & Rahmiye Ceylan & Makbul Yelboga & Meral Ozalp & Eda Ilbasmis & Oya Sav, 2017. "Impact of Taxation on Price Formation in Agricultural Markets: Example from Antalya Greenhouse Production," Journal of Agricultural Science, Canadian Center of Science and Education, vol. 9(6), pages 120-120, May.

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    More about this item

    Keywords

    rural markets; agricultural economics; Social and Behavioral Sciences;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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