Journal Article

Budgetary and Producer Welfare Effects of Revenue Insurance

David A. Hennessy, Bruce A. Babcock and Dermot J. Hayes

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 79, issue 3, pages 1024-1034
Published in print August 1997 | ISSN: 0002-9092
Published online August 1997 | e-ISSN: 1467-8276 | DOI: http://dx.doi.org/10.2307/1244441
Budgetary and Producer Welfare Effects of Revenue Insurance

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The efficiency of redistribution of government-provided revenue insurance programs is compared with the efficiency of the 1990 farm program. The results indicate that revenue insurance would be more efficient because it would provide subsidies when and only when revenue is low and marginal utility is high, and it works on the component of the objective function (revenue) that is of greatest relevance to producers. Simulation results indicate that a revenue insurance scheme that guarantees 75% of expected revenue to risk-averse producers could provide approximately the same level of benefits as the 1990 program, at as little as one-fourth the cost.

Keywords: deficiency payments; government costs; producer welfare; revenue insurance; G220; Q180

Journal Article.  0 words. 

Subjects: Agricultural Economics ; Insurance

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