DP6615 Optimal Taxation with Joint Production of Agriculture and Rural Amenities
|Author(s):||Georges Casamatta, Gordon Rausser, Leo K Simon|
|Publication Date:||December 2007|
|Keyword(s):||joint production, rural amenities|
|JEL(s):||H21, H23, Q10|
|Programme Areas:||Public Economics|
|Link to this Page:||cepr.org/active/publications/discussion_papers/dp.php?dpno=6615|
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 labour). 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.