Journal Article

Agricultural Export Subsidies as a Tool of Trade Strategy: Before and after the Federal Agricultural Improvement and Reform Act of 1996

Howard D. Leathers

in American Journal of Agricultural Economics

Published on behalf of Agricultural and Applied Economics Association

Volume 83, issue 1, pages 209-221
Published in print February 2001 | ISSN: 0002-9092
Published online February 2001 | e-ISSN: 1467-8276 | DOI: https://dx.doi.org/10.1111/0002-9092.00148
Agricultural Export Subsidies as a Tool of Trade Strategy: Before and after the Federal Agricultural Improvement and Reform Act of 1996

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If the main justification for agricultural export subsidies is that they reduce government costs of deficiency payments, then the 1996 farm legislation would make U.S. export subsidies largely unnecessary. An additional argument advanced in favor of export subsidies is that their aggressive use by one country will cause competing countries to reduce or discontinue their own subsidies. This argument is explored by means of a Nash equilibrium in which countries choose both a base subsidy level and a response to competitors, and by a consistent conjectures equilibrium. Little support is found for the argument.

Keywords: agricultural policy; EEP; export subsidies; strategic interactions; F130; Q170; Q180

Journal Article.  0 words. 

Subjects: International Trade ; Agricultural Economics

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