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Hidden action, risk aversion and variable fines in agri‐environmental schemes*

Hidden action, risk aversion and variable fines in agri‐environmental schemes* This note analyses the design of agri‐environmental schemes for risk‐averse producers whose input usage is only observable by costly monitoring. The scheme penalises producers in proportion to input use in excess of a quota. A striking result is that if the scheme is designed in such a way that producers always comply with the quota, risk aversion is not relevant in determining the level of input use. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png The Australian Journal of Agricultural Resource Economics Wiley

Hidden action, risk aversion and variable fines in agri‐environmental schemes*

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References (23)

Publisher
Wiley
Copyright
Copyright © 2008 Wiley Subscription Services, Inc., A Wiley Company
ISSN
1364-985X
eISSN
1467-8489
DOI
10.1111/j.1467-8489.2008.00408.x
Publisher site
See Article on Publisher Site

Abstract

This note analyses the design of agri‐environmental schemes for risk‐averse producers whose input usage is only observable by costly monitoring. The scheme penalises producers in proportion to input use in excess of a quota. A striking result is that if the scheme is designed in such a way that producers always comply with the quota, risk aversion is not relevant in determining the level of input use.

Journal

The Australian Journal of Agricultural Resource EconomicsWiley

Published: Jun 1, 2008

Keywords: ; ;

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