Credit Market Imperfections and the Distribution of Policy Rents: The Common Agricultural Policy in the New EU Member States

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractThis article analyses how credit market imperfections affect the impacts of subsidies by analyzing the effects of agricultural subsidies in the new Eastern Member States of the European Union with a partial equilibrium model which integrates credit and land market imperfections. We show that credit constraints have important implications for the distribution of policy rents. Credit market imperfections may induce very different effects of direct payments and lump-sum transfers.

Credit Market Imperfections and the Distribution of Policy Rents

“…For illustrative purposes, we use linear functions in the figures. The results that we illustrate hold in general, as proven by the mathematical derivations in Ciaian and Swinnen (2009). In figure 1, with fixed land supply A T and land demand D, the equilibrium rent is r * .…”

“…Again the formal derivations are in Ciaian and Swinnen (2009) and we use a graphical analysis to illustrate the effects (figure 3). With area payment s, farm 2 land demand shifts upwards, from D 2 c to D 2 cs .…”

“…A first attempt to address this shortcoming was by Ciaian and Swinnen (2006) who analyze how imperfections in land markets affect the distributional effects of agricultural policies in Central and Eastern European countries. Nobody, to our knowledge, has analyzed the impact of credit market imperfections on the incidence of agricultural policies.…”

Static and Dynamic Distributional Effects of Decoupled Payments: Single Farm Payments in the European Union

“…In their analysis Kilian and Salhofer (2008) assume full tradability of SFP entitlements in the EU. In contrast, Ciaian and Swinnen (2007) assume that the SAPS entitlements are non-tradable in the NMS. In reality, the EU and national regulations often allow trade with SFP entitlements, but only under certain conditions (see table 1).…”

“…Second, regarding the temporal scale of the effects, both Kilian and Salhofer (2008) and Ciaian and Swinnen (2007) adopt a static framework. However, the allocation of entitlements is 3 There is a large related literature on the effects of tradability of production quota (Alston, 1981;Burrell, 1989;Babcock and Foster, 1992;Guyomard, et al, 1996;Sumner and Wolf.…”