Price Subsidies Research Articles

Optimizing Household Chlorination Marketing Strategies: A Randomized Controlled Trial on the Effect of Price and Promotion on Adoption in Haiti.

Household water treatment can reduce diarrheal morbidity and mortality in developing countries, but adoption remains low and supply is often unreliable. To test effects of marketing strategies on consumers and suppliers, we randomized 1,798 households in rural Haiti and collected data on purchases of a household chlorination product for 4 months. Households received randomly selected prices ($0.11-$0.56 per chlorine bottle), and half received monthly visits from sales agents. Each $0.22 drop in price increased purchases by 0.10 bottles per household per month (P < 0.001). At the mean price, each 1% drop in price increased purchases by 0.45% (elasticity = 0.45). There is suggestive evidence that household visits by some sales agents increased purchases at mid-range prices; however, the additional revenue did not offset visit cost. Choosing the lowest price and conducting visits maximizes chlorine purchase, whereas slightly raising the retail price and not conducting visits maximizes cost recovery. For the equivalent cost, price discounts increase purchases 4.2 times as much as adding visits at the current retail price. In this context, price subsidies may be a more cost-effective use of resources than household visits, though all marketing strategies tested offer cost-effective ways to achieve incremental health impact. Decisions about pricing and promotion for health products in developing countries affect health impact, cost recovery, and cost-effectiveness, and tradeoffs between these goals should be made explicit in program design.

FIGHTING POVERTY AND CHILD MALNUTRITION: ON THE DESIGN OF FOREIGN AID POLICIES

This paper investigates how the different food aid programs affect economic development via their effect on the parental trade-off between the number of children and the investment in each child's human capital. This is done in an OLG framework where parents decide on the number of children and the nutrition and secondary schooling of each child. Primary schooling is mandatory. Providing school meals locks countries with no children attending secondary schooling into poverty by reducing the private (nutrition) cost per child. In countries where parents find it optimal to enroll children in secondary schooling, food aid increases the marginal benefit of schooling. Consequently, school feeding programs are conducive to economic development in these countries. If food aid is in the form of a food price subsidy, we show that child nutrition and thus children's human capital increase unambiguously. Although fertility and schooling are not directly affected, a sufficiently high subsidy rate will induce parents to begin to enroll children into secondary schooling by the assumed complementarity between nutrition and schooling in the human capital production function. If the food aid program provides a fixed amount of food per child, this decreases the marginal benefit of parental nutritional investments; therefore, it leads to higher fertility and to lower total provision of nutrition per child.

Custos Sociais e Orçamentários das Políticas de Garantia de Preços no Brasil - estudo dos casos de arroz e milho

Resumo: O objetivo geral deste artigo é mensurar os custos sociais e orçamentários da política de garantia de preços para o arroz e o milho de 1986/87 a 2012/13. Nesse período, ocorreram importantes mudanças na Política de Garantia de Preços Mínimos (PGPM) e os dois produtos citados foram, sistematicamente, atendidos pela PGPM. Para tanto, desenvolveram-se modelos matemáticos para calcular o custo social para três políticas de garantia de preços mínimos (preço subsídio, aquisições do governo e seguro de preços) e esses custos sociais foram estimados apenas quando o preço mínimo superou o preço de mercado. Constatou-se que houve operacionalização das políticas de PGPM mesmo quando o preço mínimo esteve abaixo do preço de mercado. Ao se comparar os custos sociais com os custos orçamentários nos anos-safra supracitados, verificou-se que, de modo geral, o custo social por tonelada de arroz e de milho foi menor para o programa de seguro de preços, seguido do preço subsídio e das aquisições do governo. Esses resultados auxiliam na escolha futura de qual instrumento de PGPM se utilizar.

Comparing Renewable Energy Policies in E.U.15, U.S. and China: A Bayesian DSGE Model

ABSTRACT The promotion of renewable energy sources (RES) by governments is one way of helping countries to meet their energy needs while lowering greenhouse gas emissions. In this paper, we examine the role of energy policy in RES promotion, based on a carbon tax and RES price subsidy, at a time of technological and demand shocks in the European Union (E.U.) 15 countries, the United States (U.S.) and China, focusing on the macroeconomic implications. Using a dynamic stochastic general equilibrium model for RES and fossil fuels, our results suggest that, in the presence of a total factor productivity shock in the fossil fuel sector, such an energy policy can also be a driving force for smoothing the reduction of RES in the energy market (and vice versa). Additionally, we show that the E.U.15 grouping has a comparative advantage in terms of reaching grid parity compared with the other countries we considered which are more fossil fuel dependent.

Economic Benefits Analysis of Battery Charging and Swapping Station for Pure Electric Bus in Public Transportation Field

As a breakthrough for the development of new energy automobile industry in China, pure electric buses have made great achievements. From the perspective of the development of pure electric buses, the construction of BCSS plays a crucial role. The economic benefits of BCSS, as one of the most important problems in the process of industrialization, has received lots of attention. After analyzing constructing and operating status, this paper builds up economic benefits model founded on cost-benefit model and chooses NPV as the assessing indexes of economic benefits. The uncertainty of economic benefits is also analyzed by using the break-even analysis and sensitivity analysis. At the end of the paper, the economic benefits of BCSS in Xue Jiadao, Qingdao, was analyzed through utilizing the economic benefits model. Results show that China's BCSS for pure electric buses under current stage has limited profitability, which is not conducive to commercialization. Results of Break-even analysis will provide references for the design of charging price and for the prediction of service scale. In addition, after sensitivity analysis, we found that the key factors influencing economic benefit of BCSS were charging price, battery renting price, power purchasing price and state subsidies in the descending order of importance. The established economic model and the analyzing results could provide references for economic benefits assessment and decision-making for the commercial development of BCSS of electric buses.

Analysis of China's wind power development driven by incentive policies based on system dynamics model

Under the increasing pressure of mitigating air pollution, wind power has been considered as the leader of China's energy revolution for a long time. Although China's wind power development enjoys a favorable policy environment, it is still impeded by the problem of wind power curtailment and overreliance on price subsidies. First, this paper built a system dynamics model to simulate China's wind power development during 2012–2032 considering both economic and technical factors. Further, sensitivity analyses and scenario analysis are performed to analyze the variation ranges of simulation results of different factor settings. The analysis results indicate that China's wind power might not develop as expected under the current development pattern. Our model allows evaluating the long-term trend and major constraints of China's wind power under the latest incentive policies, thus helping to provide reference for policy-making institutions.

Moving in the right direction? The role of price subsidies in fertilizer use and maize productivity in Ghana

Despite major maize programs in the last two decades and costly investments in a price subsidy program in Ghana, maize productivity remains very low. Utilizing cross-sectional data on 645 maize plots in Ghana, this paper provides empirical evidence on the responsiveness of maize yield to fertilizer application, profitability of fertilizer use, and how the economics of fertilizer use have changed with the subsidy program. There was a statistically significant maize yield response to increased fertilizer application (i.e. 1-kg of nitrogen leads to a yield increase of 22–26 kg per hectare), higher than those estimated in other countries in Africa. Value-cost ratio shows that maize production with fertilizer is profitable both at market and subsidized prices in different locations and with different farming practices, even after incorporating risk into the estimation and analysis. However, despite subsidized prices and profitable fertilizer use, the actual application rate (at 44 kg/ha of nitrogen on average) is much lower than research institute’s and government recommendation and far off the computed economically “optimal” levels (at 225 kg/ha of nitrogen; where the fertilizer price intersects the value of marginal physical product derived from the yield response model). Results suggest that fertilizer prices do not seem to be the binding constraint in greater fertilizer application and productivity increases in maize; other factors appear to be major bottlenecks to greater fertilizer application and productivity increases including accessibility to modern varieties, mechanization, and hired labor. This result shows the limits to fertilizer subsidy as the focus strategy and suggests a more integrated and holistic approach to encourage greater fertilizer application, productivity and income among maize farmers in Ghana.

Childcare Assistance: Are Subsidies or Tax Credits Better?

AbstractWe evaluate price subsidies and tax credits for childcare. We focus on partnered women's labour supply, household income and welfare, demand for childcare and government expenditure. Using Australian data, we estimate a joint, discrete structural model of labour supply and childcare demand. We introduce two methodological innovations – a more flexible quantity constraint that total formal and informal childcare hours are at least as large as the mother's labour supply and the explicit inclusion of maternal childcare in the utility function as a proxy for child development. We find that tax credits are more effective than subsidies in terms of increasing average hours worked and household income. However, tax credits disproportionately benefit wealthier and more educated women. Price subsidies, while less efficient, have positive redistributional effects.

Externalities in the Urban Economy

This paper is concerned with the economics of urban externalities. We start by reviewing the literature on urban externalities, and observe that although many interesting contributions have been made, there seems to be sufficient scope and need for further research, both theoretically and empirically. We identify what we believe to be important advances to be pursued in future research on urban externalities. These include (1) the explicit consideration of mutual interactions between externalities; (2) a thorough analysis of the relationship between these externalities and urban form; and (3) a clear focus on (realistic) second-best policies. The importance of these issues is illustrated by developing a simple urban general equilibrium model in which we study the interactions between agglomeration externalities and pollution from commuting. Our results show that seemingly impossible findings from a non-spatial perspective, namely a simultaneous stimulation of agglomeration externalities and a reduction of environmental externalities, is in fact the outcome of first-best policies in our spatial model. Moreover, while the incentives from road pricing and labour subsidies would seem to be perfectly opposite in a non-spatial setting, leaving one of the two instruments redundant, our results show that their welfare effects may, in contrast, turn out to be strongly super-additive when a spatial perspective is taken.

Healthy and environmentally sustainable food choices: Consumer responses to point-of-purchase actions

There are numerous government and industry actions that could advance consumer choices for healthier and environmentally sustainable food products. This study investigates the effect of point-of-purchase actions; price changes, health and/or environment logos, health and/or environment product information labels. Three hypothetical choice experiments investigated choices between specific products and their healthy and sustainable alternatives: rice (white versus brown rice, n=280), meat (beef versus kangaroo steak, n=344) and tomatoes (tinned versus fresh tomatoes for a tomato sauce, n=320). Data was collected via an online survey from a representative nationwide sample of Australian household grocery buyers (N=944).Results show that the effects of the investigated actions are very product and consumer segment dependent. In general, price changes, particularly a decreased price (subsidy) for the healthy and sustainable alternatives, had a bigger effect on shifting choices than did a logo and/or label. Product similarity seems to play an important role as we observed the greatest shift in choices in the rice experiment with more respondents opting for brown rice instead of white rice. The responsiveness of consumers to the investigated measures was largely influenced by whether they were familiar with, and liked, the healthy and sustainable product alternative.In conclusion this study indicates that point-of-purchase actions may partially contribute to advance uptake of healthy and sustainable food alternatives. The effects of such measures are expected to be greater when these alternatives are more similar to the standard products for their sensory properties, convenience, product liking and familiarity.

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

Estimating Equilibrium in Health Insurance Exchanges: Price Competition and Subsidy Design under the ACA

国际视野下的农业水价改革：一个研究综述

国内外的研究普遍认为，农业水价改革是解决农业用水浪费问题的主要途径，水价应该成为调节农业用水的重要经济机制。农业水价改革的目标价格是供水成本，提价的同时应该给予适当补贴。农业水价改革的未来研究重点应该是：农用水定价的理论依据、水价补贴的科学调整、水价改革路径的正确选择。 Domestic and foreign research generally believe that the reform of agricultural water price is the principal approach to solve the problem of agricultural water waste, and water price should become a critical economic mechanism to regulate agricultural water use. The target price of agricultural water price reform is the cost of water supply, and should be appropriately subsidized at the same time. The future research emphasis of agricultural water price reform should be as follows: the theoretical basis of agricultural water pricing, the scientific adjustment of water price subsidies, and the correct choice of water price reform path.

Reimbursement and hospital competition in China

Quality and the costs of health care are of concern among patients. Differing from previous research into hospital competition, this article captures the impact of price subsidy of public hospitals on the quality of private hospitals, considering both horizontal and vertical product differentiation by employing a two-stage dynamic game under Cournot and Stackelberg competition. Firstly, the results of this study indicate that medical reimbursement of public hospitals has stimulating effects on the quality of private hospitals and the improvement of quality is related to the degree of hospital competition. Second, the quality of health care and patients’ surplus and social welfare are the highest under Stackelberg competition if the public hospital is the leader while the private hospital is the follower. Finally, the demand for health care rises with the price subsidy of public hospitals. These conclusions have significant policy implications for health care system reform, especially for China.

Effect of Food Subsidies on Micronutrient Consumption

In this article, we study the effect of an exogenous increase in wheat and rice price subsidy to poor families resulting from a targeted food price subsidy programme in India called the Targeted Public Distribution System (TPDS) on micronutrient intake in low-income families. Descriptive results show that wheat and rice have one of the lowest micronutrient density scores, suggesting that these are poor suppliers of micronutrients. Empirical analysis suggests that the increase in monthly per capita subsidy amount of ₹15–18 resulting from the TPDS expansion lowered calcium intake by 12–14 per cent and had negligible to small (often negative) effects on the consumption of most micronutrients.

Coordination with Price Subsidy When Channels Compete in Real Estate Supply Chain

Coordination with Price Subsidy When Channels Compete in Real Estate Supply Chain

The Game Model between Government Subsidies Act and Green Supply Chain

In order to promote the development of green product market, the government will adopt fiscal subsidies to encourage enterprises and consumers. This paper builds the game model of the manufacturers and retailers from the aspect of green supply chain based on the government subsidies. Consider the green supply chain consisting of manufacturers and retailers, the influence of subsidy amount on the decision-making behaviors of the manufacturers, retailers and consumers respectively under the mode of government fiscal subsidies to manufacturers and consumers are studied. Analyze the influence of government subsidy on the decision-making behaviors of manufacturers, retailers and consumers through numerical simulation analysis, and further compare the difference between the manufacturer subsidy mode and consumer subsidy mode. The results indicate that: (1) the manufacturers and retailers will choose consumer subsidy mode; (2) the selection of subsidy mode by consumers is mainly influenced by the relative size of price sensitivity coefficient and subsidy sensitive coefficient.

Optimal price subsidies for appropriate malaria testing and treatment behaviour.

BackgroundMalaria continues to be a serious public health problem particularly in Africa. Many people infected with malaria do not access effective treatment due to high price. At the same time many individuals receiving malaria drugs do not suffer from malaria because of the common practice of presumptive diagnosis. A global subsidy on artemisinin-based combination therapy (ACT) has recently been suggested to increase access to the most effective malaria treatment.MethodsFollowing the recommendation by World Health Organization that parasitological testing should be performed before treatment and ACT prescribed to confirmed cases only, it is investigated in this paper if a subsidy on malaria rapid diagnostic tests (RDTs) should be incorporated. A model is developed consisting of a representative individual with fever suspected to be malaria, seeking care at a specialized drug shop where RDTs, ACT medicines, and cheap, less effective anti-malarials are sold. Assuming that the individual has certain beliefs of the accuracy of the RDT and the probability that the fever is malaria, the model predicts the diagnosis-treatment behaviour of the individual. Subsidies on RDTs and ACT are introduced to incentivize appropriate behaviour: choose an RDT before treatment and purchase ACT only if the test is positive.ResultsSolving the model numerically suggests that a combined subsidy on both RDT and ACT is cost minimizing and improves diagnosis-treatment behaviour of individuals. For certain beliefs, such as low trust in RDT accuracy and strong belief that a fever is malaria, subsidization is not sufficient to incentivize appropriate behaviour.ConclusionsA combined subsidy on both RDT and ACT rather than a single subsidy is likely required to improve diagnosis-treatment behaviour among individuals seeking care for malaria in the private sector.Electronic supplementary materialThe online version of this article (doi:10.1186/s12936-016-1582-1) contains supplementary material, which is available to authorized users.

Cross subsidy removal in electricity pricing in India

In India electricity price for agriculture is cross subsidized by the industries. The Indian government has started a process through which the extent of cross subsidization is gradually being reduced. The idea is to replace the cross subsidization by 2030 and introduce a rate structure that will increase with the amount of electricity usage. This paper uses the Computable General Equilibrium framework to evaluate the ex-ante impact of these policy changes on the Indian economy. The paper finds that removal of cross subsidies will increase inflation particularly food inflation resulting in a decline in household incomes more so in rural areas. Replacing cross subsidies with a progressive rate structure will compensate for only a small part of the negative effects of the removal of cross subsidies. Four other policy options are also investigated targeting household incomes, food inflation and general inflation. Most of these options do not work as the required increase in budget deficit is unlikely to be bearable to the government. The only feasible option appears to be a direct price subsidy to agricultural sector: in this case food prices are held down, inflation is moderate and effect on household incomes is minimal.

A normative justification of compulsory education

Using a household production model of educational choices, we characterise a free-market situation in which some agents (high wagers) fully educate their children and spend a sizable amount of resources on them, while others (low wagers) educate them only partially. The free-market equilibrium is iniquitous, both because the households have different resources and because the children have different access to education. Public policy is thus called for, for vertical as well as horizontal equity purposes. Conventional wisdom has it that both objectives could be achieved using price control instruments, i.e. income taxes and price subsidies. We find instead that income taxes reduce equality of opportunity and that price subsidies cannot remedy this. Quantity controls become necessary: a compulsory education package, financed by a redistributive tax system, achieves both types of equity. Redistributive taxation and compulsory education are therefore best seen as complementary policies.

Petrobras: Innovation with Party Rent--Seeking

The Brazilian oil company Petrobras is a leader in the technically challenging offshore oil exploration and an innovation pioneer in this segment. In the last ten years it has discovered enough reserves to put Brazil in the group of oil exporters while serving as an anchor of an industrial policy focused on increasing domestic procurement of capital goods. These achievements made the company a poster child of developmentalists, an example of a state company that innovates and invests in long-term projects. However, recent corruption investigations revealed that former employees, suppliers and politicians were involved in a billionaire kickback scheme that used the company for illegal campaign financing and coalition building. This paper explains the puzzle of Petrobras’ as a technological leader at the same time that it was the center of party-clientelistic practices. It argues that given Brazil’s geological endowments, Petrobras could better serve open political purposes if the company continued to create rents through Schumpeterian innovation in deep offshore. Innovation supported Petrobras’ other activities, which later included politically-driven investments, bribe extraction, and gasoline price subsidies. Using a variety of data sources, including plea bargain statements and a spreadsheet of bribe rates of large projects, this paper shows how bribes and economic losses differed across industry segments, with the downstream concentrating more losses than the more innovative and subject to cost pressures upstream. Petrobras’ operational capabilities and a track record of innovation in oil extraction led to successful discoveries of new reserves that paradoxically facilitated political interference by easing historical constraints that had spared the company from political exchanges.