For such a program to be successful in raising the revenue of farmers, what must be true about the elasticity of demand?
Nothing.
One of the ways the federal government uses to restrict supply is tariffs. With a high enough tariff, domestic producers benefit no matter what the elasticity of demand.
Of course they may not benefit enough. Which is why the government props up farm income in other ways, including direct monetary subsidies, subsidized water, price floors, etc.
http://en.wikipedia.org/wiki/Agricultural_subsidy#United_States
http://greedgreengrains.blogspot.com/2009/02/effects-of-us-agricultural-subsidies.html
http://www.card.iastate.edu/iowa_ag_review/fall_01/IAR.pdf
BTW, most of these do not benefit the "family farmer"; they benefit the agribusinesses that can make the big campaign contributions.
October 20th, 2009 at 9:47 am
Nothing.
One of the ways the federal government uses to restrict supply is tariffs. With a high enough tariff, domestic producers benefit no matter what the elasticity of demand.
Of course they may not benefit enough. Which is why the government props up farm income in other ways, including direct monetary subsidies, subsidized water, price floors, etc.
http://en.wikipedia.org/wiki/Agricultural_subsidy#United_States
http://greedgreengrains.blogspot.com/2009/02/effects-of-us-agricultural-subsidies.html
http://www.card.iastate.edu/iowa_ag_review/fall_01/IAR.pdf
BTW, most of these do not benefit the "family farmer"; they benefit the agribusinesses that can make the big campaign contributions.
References :