This article shows that credit market imperfections have important implications for the distribution of policy rents. In a model with land as fixed factor and credit market imperfections, when an area payment is given, land rents go up by more than the subsidy. On aggregate farms may lose from the subsidy. The results depend on the extent to which subsidies have direct and indirect effects on the credit constraints, on whether farms rent or own land, and on farm heterogeneity.
Authors and Publishers
Ciaian, Pavel
Swinnen, Johan F.M.
Wiley-Blackwell is the international scientific, technical, medical, and scholarly publishing business of John Wiley & Sons. It was formed by the merger of John Wiley's Global Scientific, Technical, and Medical business with Blackwell Publishing, after Wiley took over the latter in 2007.[1]
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