Production Subsidies Research Articles

How the Soybean Producer Subsidy Policy affects crop planting structure: evidence from Chinese county-level data

How the Soybean Producer Subsidy Policy affects crop planting structure: evidence from Chinese county-level data

Solutions to insufficient incentives for developing green tourism by travel agencies: government intervention

PurposeThis research aims to develop an improved model with government intervention and find the government policy for developing green tourism to induce the travel agencies have incentives to produce green tourism products.Design/methodology/approachThis research employs Stackelberg game theory to study two travel agencies in the horizontal direction of the tourism supply chain. Two deterministic, price-sensitive linear demand functions are utilized for these two different tourism products to derive possible analytical solutions.FindingsNo travel agency is willing to produce green tourism products without government intervention. The solution proposed in this paper is that a government should subsidize green travel agencies for their production of green tourism products, and create a tax for non-green traditional travel agencies for the production of non-green traditional tourism products. The amount of government subsidies for green tourism products plus the tax on non-green traditional tourism products equals the difference in unit cost of the two products. The travel agency that produces green tourism products has incentive to produce if there is government intervention.Practical implicationsThis paper provides the stakeholders with three practical implications. The first one is that the amount of subsidy for green travel agencies can be paid by taxing non-green ones. This is the optimal solution. The second one for both the tourism sector and government is that technological innovation in cooperation between government and tourism industry such as low-carbon technology is critical to reduce the cost difference between green travel agency products and non-green ones. The third one is that green travel agencies that produce green tourism products can also fulfill their corporate social responsibilities and enhance their social image.Originality/valueThis paper is unique in that it develops a model to resolve the problem of insufficient incentives. In terms of government intervention, this article also considers tax policy in addition to subsidy policy which is different from previous literature.

Power battery modular innovation investment strategies with government subsidy policies

This paper investigates the closed-loop supply chain decisions of battery manufacturers considering innovation investments and different subsidy methods provided by the government. The analysis encompasses four scenarios: whether battery manufacturers engage in innovation investments and whether the government opts for technology R&D subsidies or production subsidies. The study finds that innovation investments by battery manufacturers can enhance the modularization level of batteries. The reward or penalty measures for recycling quality imposed on automobile manufacturers elevate the quality of battery recycling, and also increase the wholesale price of batteries and the retail price of automobiles. After implementing R&D and production subsidies, both the modularization level of batteries and the profits of supply chain members exceed those without subsidies, though these subsidies do not affect the quality of battery recycling. R&D subsidies more effectively promote innovation capacity and product quality among battery manufacturers, whereas production subsidies more significantly boost the profits of both battery manufacturers and automobile manufacturers. Therefore, subsidy measures should be tailored according to different stages of the power battery industry's development. Regardless of whether battery manufacturers invest in innovation or whether the government provides subsidies, collaboration between battery manufacturers and automobile manufacturers is essential to coordinate the closed-loop supply chain. The research findings offer valuable guidance for formulating subsidy policies in the new energy vehicle industry across different periods, and also provide theoretical insights for decision-making behaviors among related enterprises.

Optimal supply chain green innovation and subsidy strategy: producer subsidy versus consumer subsidy

PurposeConsidering two types of subsidies for producers (supplier and manufacturer) and one for consumers based on product greenness and sales quantity, this study aims to formulate optimal supply chain green innovation and subsidy strategies, and to achieve this goal with the support of information systems.Design/methodology/approachThis study introduces a composite green-product supply chain where suppliers focus on green innovation for component greenness and manufacturers focus on green innovation for manufacturing process greenness. Game theory modeling is applied to investigate the differences of product greenness, supply chain members’ profit and social welfare under different government subsidy strategies.FindingsIncreasing the unit greenness subsidy coefficient can boost product greenness and supply chain members’ profits, but does not always raise social welfare. When the government exclusively offers subsidies to producers, subsidies should be allocated to suppliers when there is a significant disparity in supply chain green innovation costs. Conversely, it is more beneficial to subsidize manufacturers. Consumer subsidies have the potential to enhance both environmental and economic performance in the supply chain compared with producer-exclusive subsidies, but may not always maximize social welfare when supply chain members have low unit costs associated with green innovation.Originality/valueThis study examines the optimal decisions for green supply chain innovation and government subsidy strategies. Supply chain members and the government can use the information system to collect and evaluate the cost of upstream and downstream green innovation, and then develop reasonable collaborative green innovation and subsidy strategies.

Analysis of government subsidy strategies for blockchain-enabled green supply chains under competition

This study uses game-theory to construct a dual-channel green supply chain consisting of a manufacturer, a blockchain-enabled platform, and a non-blockchain-enabled offline retailer, with the aim of comparing two government subsidy strategies: greenness investment cost subsidy and production subsidy, and exploring the impact of blockchain adoption. First, firms without government subsidy should adopt blockchain only when privacy costs are low. Both subsidy strategies can always motivate the manufacturer to increase greenness investment levels and achieve a triple-win situation. Second, when the government controls the greenness investment level, the demand, profits, and subsidy amount under cost subsidy are always lower than those under production subsidy. Third, when the government controls the subsidy amount, the greenness investment level under cost subsidy is always higher than that under production subsidy. The offline demand and retailer’s profit are higher under production subsidy, while the online demand and platform’s profit are higher under cost subsidy. The manufacturer’s profit is higher under cost subsidy only when the subsidy level is low. Additionally, regardless of governmental goals, the platform’s profit is always higher than the retailer’s profit, indicating that downstream firms under government subsidy should always adopt blockchain.

Dynamic Analysis of the Multichannel Supply Chain Under Carbon Subsidy Policy

For achieving the goals of carbon peaking and carbon neutrality, the government will further strengthen subsidies to enterprises for carbon emission reduction. This paper investigates the long-term repeated game behavior of manufacturer and retailer in multichannel supply chains under three different forms of government subsidies. The long-term repeated game behavior of manufacturer and retailer is studied under the manufacturer green innovation subsidy model (IS model), manufacturer production subsidy model (MS model) and retailer sales subsidy model (RS model). Under three situations, excessive price adjustment can easily lead to system instability and sharp fluctuations in profits. Two methods are used for chaos control and management, and the parameter adjustment control method is found having more advantages for system re-stabilization.

Improving Northeast China’s soybean and maize planting structure through subsidy optimization considering climate change and comparative economic benefit

The planting structure of Northeast China (NEC) is greatly responsible for China’s food security and self-sufficiency. Climate change promoted the northward expansion of the suitable planting area for maize in NEC, and its higher comparative economic benefit largely helped it occupy the soybean planting space. Yet, knowledge on how climatic suitability and comparative economic benefit affected the northward expansion of maize planting area is limited. To bridge this gap, this study quantified the climatic suitability of maize and soybean from 1981 to 2020 using the fuzzy mathematical method. Combined with yield, crop distribution and social economic data in 2000, 2010 and 2020, this study further calculated the comparative economic benefit between the two crops. Furthermore, a crop planting decision simulation model was developed to clarify the impact of climatic suitability and comparative economic benefit on the planting area of soybean and maize. Results showed that from 2000 to 2010, the maize planting area increased dramatically. This was due to the continuous northward expansion of the most suitable region (S1) for maize from 47.63°N to 48.43°N before 2010, along with the fact that 65% of the total area was more profitable to plant maize. From 2010 to 2020, the maize planting area partially retreated, mainly due to the shrinking trend of the northern boundary of S1 for maize and the implementation of soybean producer subsidy. The improvement of maize climatic suitability played a fundamental role in the northward expansion of its planting area. On this basis, the comparative economic benefit was critical for planting proportion adjustments. The current soybean producer subsidy largely reduced the profit gap between the two crops, but it was still insufficient in nearly one-third of the total area. This study suggested to increase amount of soybean subsidies in the identified soybean-maize imbalanced regions. Specifically, the average recommended increase amounts ranged from 756 to 2052 CNY/ha depending on the regions. These findings could provide valuable references for understanding the motivation of crop planting decisions and optimizing the corresponding subsidy policies.

Agricultural Producer Subsidies

Agricultural Producer Subsidies

Evolutionary game model and simulation analysis of multi-stakeholder behaviour for promoting Braille labelling on pharmaceutical packaging in China’s legal framework

This study investigates the factors influencing the lack of Braille-embossed labels in Chinese pharmaceutical product packaging. To this end, this study constructs an evolutionary game model of multi-participant behaviour in drug production regulation and conducts simulation based on the perspective of stakeholders in order to study the evolutionary steady state of regulatory authorities, pharmaceutical companies, and visually impaired individuals and the influence of each parameter variable on the choice of strategic behaviour of the participants. The simulation results show that in the legal framework of China, administrative penalties, the production subsidy rate, and the Basic Medical Insurance (BMI) reimbursement rate are the main drivers of the system’s evolution towards a steady state. Reduced costs of drugs with Braille-embossed packaging is a prerequisite for the visually impaired to purchase such drugs, and the key for the whole system to converge to a stable state therefore lies in the BMI reimbursement rate for drugs with Braille-embossed packaging. This paper suggests that the Chinese government should improve the law enforcement mechanism for the regulation of the production of drugs with Braille-embossed packaging; increase the type and intensity of administrative penalties as well as production subsidies, tax incentives, and compliance incentives for pharmaceutical companies; and provide higher BMI reimbursement rates for the visually impaired. The results of the study provide valuable insights to improve accessibility to drugs and build a barrier-free environment for ensuring medication safety in China and other developing countries.

Dairy subcomplex of Kazakhstan: condition, measures to improve efficiency

The current state of production of milk and its processed products in the regions of Kazakhstan has been studied. The goal is to assess the situation on dairy market, identify problems hindering the development of the industry, and develop recommendations to increase its competitiveness. Methods – monographic, logical, systemic and complex analysis, statistical data processing, constructive-functional approach. The works of domestic and foreign economists concerning the problems of dairy cattle breeding and milk processing structures were used as theoretical and methodological basis for scientific research. Results - factors directly influencing the growth of dairy product volumes were analyzed, including their quality, profitability, operation of logistics systems (supply chain, product transportation, transportation optimization), and marketing strategies. The method of economic and mathematical modeling was used to determine the strengths and weaknesses of enterprises, as well as the opportunities and threats of the external environment. Particular attention is paid to aspects of regulation of legislative framework, as well as adaptation to changing market conditions and consumer preferences. To increase production of own high-quality milk and reduce import dependence, the state actively supports and stimulates the creation of dairy farms, increases the volume of state subsidies for agricultural producers, and simplifies lending and micro lending system. It is important to ensure increase in profitability of dairy producers, reduce the influence of seasonality on price situation of dairy market, and develop infrastructure of social nutrition system. Conclusions - it is necessary to introduce new technologies, digital transformation in livestock farming, increase in technical equipment, allowing to increase the size of gross product, level of self-sufficiency in domestic products and expand participation in foreign trade as the main form of international economic relations.

Effectiveness of government subsidies for biomass-based industries: Incorporating the feedstock acquisition process

Governments are providing an increasing number of subsidy policies for biomass-based industries. Although one of the main barriers to the development of the biomass industry is the high cost of feedstock, it remains unclear how effective different subsidies are in addressing that barrier. In this paper, we categorize biomass subsidies and explore their effectiveness by developing a biomass feedstock supply model. First, we examined biomass subsidies in China and the United States and found that all biomass subsidies can be grouped into four categories based on the types of costs they seek to mitigate: production and transport subsidies for biomass utilization improvement and product and operating subsidies for specific biomass industry development. Then, we developed a game-theoretic model of the interactions between the government and biorefineries and compared the effectiveness of the subsidies. The results indicate that transport subsidies are more cost-effective at increasing biomass utilization. However, the production subsidy allows for more even use of biomass across different biorefineries. A combination of operating and product subsidies is more cost-effective in enhancing the profitability of specific biomass industries if the industry to be supported is quite unprofitable; otherwise, the product subsidy is better.

Being Green and Prudent: Economy-Wide and Environmental Impacts of Renewable Energy Production Subsidy in Nigeria

ABSTRACT: Green fiscal policies are becoming prominent policy instruments for achieving energy transition. However, while the effectiveness of these policies on renewable energy outcomes have been well documented, the economy-wide impacts are rarely studied. This study examines the economy-wide and environmental impacts of renewable energy production subsidy in Nigeria. The study provides a novel modeling framework for analysing fiscal and other incentives for green energy in Nigeria by incorporating self-generated electricity, which is a major component of electricity supply in Nigeria, into a macroeconomic model. The study uses a Computable General Equilibrium (CGE) model to analyse the effectiveness and economic impacts of renewable energy production subsidy in Nigeria. CGE models are commonly used to assess the economy-wide impacts of public policy. Specifically, the PEP-1-1 model, which is a static single-country model, is used for the analysis. The model is calibrated on Nigeria's updated social accounting matrix (SAM). The results of the analysis show that renewable energy production subsidy is effective in enhancing the development of the renewable-electricity sector and encouraging the use of renewable electricity but does not significantly reduce the use of conventional electricity sources. The subsidy, if financed by public deficit, has positive impacts on real economic outcomes such as GDP, household income, welfare, and employment, but has a smaller effect on CO2 emissions. In contrast, the economic effects are mostly negative, but the CO2 emissions-reduction effects are larger if the subsidy is financed by reallocation of public expenditure. In addition, the effects on sectoral outputs are mixed. The results of this study can be used by policy makers to ascertain how to finance green subsidies in fiscally constrained and energy-poor developing countries. Specifically, policy makers should take cognizance of economic and feedback effects when designing and implementing environmental policies. Beyond Nigeria and the specific case of fiscal subsidies, the modeling framework presented in this study can be applied to other green energy policies and can be adapted to other developing countries.

Economic impacts of power-to-liquid fuels in aviation: A general equilibrium analysis of production and utilization in Germany

The aviation industry faces an urgent need to adopt sustainable aviation fuels for significant decarbonization. Power-to-Liquid (PtL) fuel is considered a potential game changer, but questions remain about the wider economic impacts of introducing PtL fuel in the aviation sector. This paper examines the economic impacts of introducing PtL fuel blending quotas along with a price policy consisting of a kerosene tax and PtL fuel subsidies for the case of Germany. Based on a detailed supply chain analysis, we apply a social accounting matrix and a computable general equilibrium model to take into account both, the production and utilization perspectives of PtL jet fuel. Our results show that the influence of low blending quotas is mainly limited to the aviation sector, with a 10 % blending quota increasing consumer prices by 7.9 % and reducing aviation industry output by 3.1 %. When quota levels increase, however, the effects go beyond the air transport system. On inter-sectoral level, we identify three main patterns: First, industries that substantially contribute to the PtL fuel supply chain, such as metal products and electrical equipment, see increasing levels in both, domestic production, and imports. Second, aviation upstream industries like transport infrastructure and aircraft production see reduced domestic production and imports. Third, aviation downstream industries, such as delivery services and travel agencies, see substitution effects, where imports partly replace domestic output. Macroeconomic indicators are affected negatively by the quota scenarios, but the relative impact is low as the maximum decrease in the gross domestic product (GDP) does not exceed 0.35 %. PtL fuel production subsidies can largely mitigate the decrease in aviation demand but come at the cost of a stronger reduction in the GDP and government income. Moreover, the sensitivity analysis emphasizes that various assumptions and parameters, such as the cost projections of PtL fuel, import options, and elasticities of demand, affect the intensity of economic consequences. Our analysis implies the trade-offs of policymaking between sectoral and macroeconomic interests in the context of sustainable fuels. The main contribution of this study is the investigation of the broader economic effects resulting from the adoption of PtL fuels in aviation. In particular, the production as well as the utilization perspective are considered simultaneously in this study.

Policy-driven food security: investigating the impact of China’s maize subsidy policy reform on farmer’ productivity

IntroductionChina is the largest producer, consumer, and trader of grain. Changes in China’s agricultural policies will affect global food trade and thus impact food security. In this paper, we use China’s maize subsidy system reform (MSSR) as a quasi-natural experiment to investigate the impact of market-oriented reforms in price support policy on the productivity of grain.MethodsWe use official Chinese government panel data on farm households and a PSM-DID model to overcome the endogeneity problem of policy change.Results and discussionThe empirical results show that MSSR can increase maize productivity. The MSSR is divided into two phases: eliminating the maize purchase price and implementing maize producer subsidies. The policy effect of eliminating the purchase price exceeds the implementation of producer subsidies. Further analysis reveals that for farmers with a larger scale of cultivation, higher level of specialization, and higher degree of part-time employment, the MSSR enhances their productivity more significantly. In the high quartile, the MSSR reduces farmers’ productivity. In the low quartile, the MSSR raises farmers’ productivity, suggesting that the MSSR reduces the productivity differences among farmers. The results of our study suggest that market-based reform of price subsidies is an effective institutional arrangement to mitigate resource mismatch and increase food productivity, and point to the need to continue to improve the MSSR, explore diversified maize producer subsidy policies, and take into account the impact of other subsidies on farmers’ maize production behavior.

How to Promote the Development of Cultural and Creative Industries from an Evolutionary Game Perspective: Policy Mechanisms for Certification + Incentives

Existing studies need to pay more attention to the policy mechanisms of how to promote the development of cultural and creative industries through coordinating multi-stakeholder participation. Based on evolutionary game theory, this study constructs a three-party evolutionary game model to analyze the behavioral patterns of the government, cultural and creative enterprises, and consumers under different support policies. In addition, it takes the Chinese intangible cultural heritage of “Huaihe willow weaving” as a typical case for simulation. The results show that the probability of the system converging to the expected equilibrium point is low after implementing the certification policy, but the probability of the system converging to the expected equilibrium is significantly increased after implementing the incentive policy. Producer subsidies have significant advantages over consumer subsidies. At this stage, the government should consider jointly implementing the “certification + incentives” policy in phases to promote the development of cultural and creative industries.

The time-varying dynamic impact of US renewable energy prices on agricultural prices in China: the case of fuel ethanol.

This paper intends to look into the time-varying dynamic impact of US fuel ethanol, one of the renewable energy sources, on the prices of agricultural products (specifically corn, soybeans, rice, and wheat) in China based on monthly price data from January 2000 to January 2023. To achieve this, a time-varying parameter vector autoregressive (TVP-VAR) model is employed, which takes into account structural changes in emergencies through time-varying parameters. The empirical results show that the equal-interval impulse responses of price fluctuations in agricultural commodities are primarily positive to variations in fuel ethanol prices and production. And the intensity and direction of the effects vary at distinct time lags. Additionally, the magnitude of these responses is most pronounced in the short term for all agricultural commodities except for corn, and the duration of the impulse responses at different time points is generally longer for corn prices compared to other commodities. The study also reveals that the influence of US fuel ethanol on Chinese agricultural commodity prices is not substantial on the whole. Therefore, there is a necessity to advance the growth of biofuels and provide policy support and financial subsidies for agricultural products earmarked for food production. These actions could shed insights into the progression of Chinese renewable energy and food policies, ensuring the stability of the market in the long run.

A proposed dietary policy package for the health sector in Iran

BackgroundInsufficient physical inactivity and an unhealthy diet are significant health risk factors globally. Dietary risk factors were responsible for approximately 16.5% of all deaths in Iran in 2019. This paper aimed to propose a dietary policy package for the health sector to reduce the risk of an unhealthy diet, which might effectively help prevent and control non-communicable diseases (NCDs) in Iran.MethodsIn this qualitative study, we conducted semi-structured, face-to-face, and in-depth interviews with 30 purposefully selected experts, including policymakers, high-level managers, and relevant stakeholders, during 2018–2019 in Iran. All interviews were digitally recorded, transcribed verbatim, and thematically analyzed, facilitated by MAXQDA 11 software.ResultsWe developed several dietary recommendations for different stakeholders. These include traffic light labeling reforms, i.e., the need to make the signs large and readable enough through utilizing advanced technology, cooperation with other sectors, promoting healthy symbols and supporting food products with them, food basket reforms, updating dietary standards, adopting appropriate mechanisms to report violations of harmful products laws, scaling up mechanisms to monitor restaurants and processed foods, and creating an environment for ranking restaurants and other relevant places to support a healthy diet, for instance through tax exemption, extra subsidies for healthy products, Non-Government Organizations (NGOs) alliances, and using influential figures.ConclusionIran’s health sector has developed a practical roadmap for the prevention and control of NCDs through promoting healthy nutrition. In line with the sustainable development goal (SDG) 3.4 pathway to reduce premature mortality due to NCDs by 30% by 2030 in Iran, we advocate for the Ministry of Health and Medical Education (MoHME) to adopt appropriate evidence-informed interventions for improving public health literacy and reducing consumption of unhealthy food.

Three strategies to revive teetering clean hydrogen dreams

A global effort is underway to realize long-held visions of a diversified clean hydrogen (H2) economy. In the United States, the Department of Energy has selected seven clean H2 hub proposals into which it plans to invest $7 billion, along with another $1 billion to stimulate demand for the molecules. Coupled with generous production subsidies, these moves are intended to support early-movers to prove business models, initiate the build-out of distribution infrastructure, and catalyze further scale-up efforts. Major public support programs are also underway in Europe, Asia, the Middle East, North Africa, and Australia. Despite this unprecedented level of public funding, there is a growing risk that follow-on commercial adoption could be mostly limited to substitution in existing uses, new entrants will struggle to gain traction, and private capital will remain on the sidelines for emerging applications. Drawing on insights from senior stakeholders from across the clean H2 value chain and investment community, we explain why the long-term prospects for most clean H2 use-cases remain moribund, and show how public support can address the underlying “system-level” gaps that must also be overcome to truly unlock large-scale growth. In particular, there is an opportunity and need for public support to help resolve three underlying issues: (i) clarifying fit with the broader clean energy ecosystem; (ii) bridging “chicken-and-egg” barriers; and (iii) harnessing incumbency without being captured by it.

Apple Value Chain Industry Mapping Value Addition and Marketing Options in Mastung and Kalat Balochistan

Present work was conducted to assess the apple value chain, and marketing margin to propose policy recommendations for apple production in Balochistan. The population of the study consists of the Kalat division; districts Mastung and Kalat were selected randomly for conducting research. A total of 120 respondents were interviewed. 25 growers, 15 wholesalers, 15 retailers, and only 10 commission agents were interviewed separately in each district. The results showed that 24.0% of the apple growers in both districts were illiterate, about 80.0% had experience of 35 to 50 years in apple production, and about 80% of the orchards were established for 20 to 25 years. Producers' profit share for different varieties of apple Tor Kulu 46.66%, Shin Kulu 34.44%, and Kaja 48.55%. Wholesalers profit share for Tor Kulu 10.31%, Shin Kulu 7.94%, and Kaja 10.29%. and the retailers' profit share for Tor Kulu was 7.50%, Shin Kulu 4.94%, and Kaja 6.27%. Further, there were no facilities for cold storage and roads. Probably, the grower’s knowledge regarding apple production and the lack of facilities for wholesalers and retailers are the main obstacles to apple production. The major problems noted during the survey were the improper infrastructure, lack of markets in the study area, illegal smuggling of apples, less availability of natural resources and credit, and the lack of market intelligence and extension services. It is suggested that there should be a good possibility to develop a policy that supports the marketing of apples, especially through agricultural cooperatives, besides further enhancing the exploitation of state subsidies for apple production.

Do Political Institutions Influence the Dismantling of Fossil Fuel Subsidies? Lessons from the OECD Countries and a Comparative Analysis of Canadian and German Production Subsidies

Despite a global consensus that fossil fuel subsidies should be reformed, limited progress has been made. The study assesses whether domestic political institutions insulating politicians from backlash and compensating those affected by reforms make subsidies easier to dismantle. It was found that proportional representation and corporatism were correlated with lower levels of fossil fuel subsidies in OECD countries. A comparative case study of coal production subsidies in Germany and gas production subsidies in Canada suggests that political insulation and compensation contributed towards the dismantling of fossil fuel subsidies. The findings provide an understanding of the impact of corporatism and electoral systems on reform.