Payments for public goods under the common agricultural policy versus market failures
Oglądaj/ Otwórz
Data
2017Autor
Polcyn, Jan
Czyżewski, Bazyli
Stępień, Sebastian
Metadane
Pokaż pełny rekordStreszczenie
In the reality of the marketplace, a situation often arises where an economic surplus (rent) achieved by agricultural producers is partly taken over by
related non-agricultural sectors. In this sense the category of economic rent embraces market failures related to such factors as price flexibility, and thus
represents an effect of the misallocation of resources in the agricultural sector. The question therefore arises of whether there exists a developmental
model of agriculture in which such market failures would be reduced. Apparently the only coherent response to this need is action taken under the
paradigm of sustainable agriculture. This type of model for the sector’s functioning is supported by the objectives of the European Union’s Common
Agricultural Policy (CAP), including through support for the supply of public goods in rural areas. This article addresses the question of whether CAP
payments for public goods are a desirable systemic solution serving to reduce market failures. It is hypothesised that the financing of activity relating
to the supply of public goods lessens the negative impact of the “market treadmill”, since it reduces the unexpected outflows of economic surplus away
from farms, caused by agricultural prices. To verify the hypothesis, a panel regression analysis was performed on three sets: the EU-15 countries, the
EU-12 countries, and – within Poland – subsectors of farms from six standard output classes. The analysis covered the years 2004–2012. The results of
the computations provided confirmation of the hypothesis. It may be stated that an increase in the level of payments for public goods, as a percentage
of total subsidies to agriculture, leads on average to a reduction in the drainage of economic rents through prices. It was also found that the financing of
public goods under the CAP is more effective in reducing market failures in the EU-15 countries than in the EU-12.
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