Optimal Taxation with Joint Production of Agriculture and Rural Amenities
Toulouse School of Economics (GREMAQ-CNRS); Centre for Economic Policy Research (CEPR)
Gordon C. Rausser
University of California, Berkeley - Department of Agricultural and Resource Economics
Leo K. Simon
U.C. Berkeley, Dept of Agricultural and Resource Economics
We show that, when there is joint production of an agricultural good and rural amenities, the first-best allocation of resources can be implemented with a tax on the agricultural good and some subsidies on the production factors (land and labor). The use of a subsidy on the agricultural good can only be explained by the desire of the policymaker to redistribute income from the consumers to the farmers.
Number of Pages in PDF File: 22
Keywords: joint production, rural amenities
JEL Classification: H21, Q18working papers series
Date posted: June 1, 2007
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