The theory of factor market distortions deals largely with taxing inputs. However, input subsidies are not only common in manufacturing. For example, U.S. agriculture is heavily dependent on input subsidies.
If water subsidies in the production of California cotton were removed, along with commodity payments, production of cotton in California would likely cease. Likewise, transportation subsidies were common in both the U.S. and Canada, and still prevail in the U.S.

Contains a dynamic programming algorithm for projecting policy parameters based on a storage model of international markets featuring uncertainty, forward-looking rational expectations and non-negative storage. This algorithm is motivated by the need for a non-analytical solution to the competitive equilibrium in a storage model of U.S. and foreign cotton policy regimes. Obtaining an analytical solution is difficult, except in a limited number of special cases. The numerical solution algorithm essentially consists of multiple nested numerical approximations that reach convergence simultaneously when the relationship between domestic storage and expected farm price achieves stationarity. Given the stationary relationship between storage and expected farm price, we then run the model forward in time (given a sequence of annual realized yield disturbances) under alternative policy regimes representing FACT and FAIR.

This paper provides a methodology that can be used to weigh the costs and benefits of precision agriculture in the measurement and application of variable-rate production technology. Empirical estimates of the economic value of precision farming in the form of variable-rate fertilizer application to corn fields in the mid-western United States are calculated and compared to the current cost of investing in this technology. The results of this study indicate that the use of precision technology in the application of fertilizer for corn production in the United States is not profitable over a relatively wide range of corn prices, nitrogen prices, and agronomic differences in soil characteristics.

In 1995/96, the government of Turkey imposed an export tax of 20 cents/kg on Aegean cotton and an ad-valorem import duty of one percent on non-aegean cotton. The simulation results for the Aegean market indicate that consumers gained $44.5 million in consumer surplus because the export tax reduced the purchase price of Aegean cotton. The Turkish government extracted export tax revenue equal to $11.6 million, but provided water, fertilizer, and credit subsidies equal to $22.2 million. Producers lost $35 million in producer surplus due to the lower domestic price caused by the export tax. However, while these numbers represent large transfers from producers to consumers, the net inefficiency due to government distortions amount to only $1.14 million in the Aegean market. Adding this number to the dead-weight loss of only $790,000 obtained from the non-Aegean market simulation, the net inefficiency caused by government intervention in Turkish raw cotton markets was only $1.93 million in 1995/96. If one considers that cotton producers in Turkey realized gross revenue of over $1.4 billion across all markets in 1995/96, the results of the analysis seems to indicate that the income transfer associated with Turkish government programs is not very inefficient.

This manuscript discusses the ongoing debate surrounding the involvement of the Canadian Wheat Board in international trade. The paper outlines a simple test of the ability of the CWB to price discriminate among export markets for the 1980/81 to 1994/95 period. The study finds evidence of the ability of the CWB to price discriminate. It also shows that the magnitude and significance of price discrimination increased during the operation of the U.S. Export Enhancement Program from 1985/86 to 1994/95.

The population of all golf course facilities that existed in Arizona in 2004 was identified and basic information regarding city, county, number of holes, and year established were collected for all 338 Arizona golf facilities. In addition, the economic impacts from revenue, tourism, and real estate premiums attributed to the Arizona golf course industry were estimated for 2004 based upon a survey of all Arizona golf course facilities. Seventy-seven golf course managers returned either partially or fully completed questionnaires, representing an overall response rate of 22.8 percent. Unbiased mean-based estimates of various impacts and other types of information contained in the survey were obtained through use of both the sample and population data. The estimates are reported for all golf courses in Arizona in 2004.

Brazil currently dominates the world sugar market in almost all aspects. It is the world’s largest producer of sugar cane, the world’s largest exporter of sugar cane, and is one of the world’s largest consumers of sugar cane (fifth in the world). From its sugar cane, Brazil produces not only refined sugar but also anhydrous and hydrous alcohol mainly used as a blend in domestically-consumed gasoline.

The Brazilian government is also highly involved in its sugar-cane market. Blend rates of alcohol to gasoline are dictated to the market by law or decree, and this policy has a direct affect on producer and consumer welfare not only in Brazil but in the world. Looking forward, some advocates of fuel alcohol in Brazil foresee the development of a substantial export market. Currently only about 0.5 to 1.0 billion liters of production are exported annually. To help promote globalization of ethanol, Brazil is currently providing information on the economics and technological aspects of ethanol production and trade worldwide.

We compare the current Canadian Supply Management regime in which producers and importers benefit from rent-seeking activities that set production quota and import quota levels with those under a tariff, in which producers partakes in rent-seeking activities in order to induce the government to introduce a favorable tariff regime. We explore three different quota-setting games: (1) the import quota and production quota are set at a level that arises from a Cournot-Nash equilibrium between producers and importers; (2) the producer marketing board acts as a Stackelberg leader, taking into account the importers’ reaction to its production quota level; and (3) the importer behaves as a Stackelberg leader, taking into account producers’ reaction to its import quota level. We compare these quota-setting games with two different tariff-setting games: (1) A non-cooperative game in which the government sets the tariff at a level that maximizes tariff revenue; and (2) A cooperative game in which producers, through rent-seeking activities, induce the government to set the tariff at a level that maximizes joint government and producer rents.