Abstract

Evaluation of U.S. agricultural policy reform is complicated by the interaction of price support programs and production constraints. Researchers have typically presumed that price support policies within the U.S. wheat program increase the producer incentive at the margin, however, little work has been done to determine whether such a presumption is warranted by the data. The results of this research indicate that price support, conditioned on production constraint, has not increased U.S. production. Furthermore, the combined effect of price support and production control within a voluntary system is shown to increase U.S. supply response with respect to market price. Given these results, opposition to certain aspects of U.S. agricultural policy, in regions such as the EC and the Cairns Group, for example, may be misguided.

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