Department of Agricultural and Resource Economics
Optimal taxation with joint production of agriculture and rural amenities
- Author(s): Casamatta, Georges
- Rausser, Gordon C.
- Simon, Leo K.
- et al.
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.