Providing Environmental Public Goods under the Common Agricultural Policy as a Cure for Market Failure

Bazyli Czyżewski , Agnieszka Brelik

Abstract

Purpose: 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. Design / Methodology / Approach: To verify the hypothesis, a panel regression analysis was performed on three sets: the EU-15 countries and the EU-12 countries. The analysis covered two hitherto accomplished CAP programming periods: 2004-2006 and 2007-2013. Findings: 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. Practical Implications: 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 mitigates the “market treadmill”, since it reduces the unexpected outflows of economic surplus away from farms, caused by agricultural prices.
Author Bazyli Czyżewski (WE / KMiGŻ)
Bazyli Czyżewski,,
- Department of Macroeconomics and Agricultural Economics
, Agnieszka Brelik - Zachodniopomorski Uniwersytet Technologiczny w Szczecinie (ZUT), MNiSW [80]
Agnieszka Brelik,,
-
Journal seriesEuropean Research Studies Journal, ISSN 1108-2976, (N/A 100 pkt)
Issue year2019
Vol22
No3
Pages 457-469
Publication size in sheets0.6
Keywords in Polishdobra publiczne, polityka rolna, regresja panelowa, WPR
Keywords in EnglishCommon agricultural policy, market failure, panel regression, public goods
ASJC Classification1400 General Business, Management and Accounting; 2000 General Economics, Econometrics and Finance
DOIDOI:10.35808/ersj/1491
URL https://www.ersj.eu/journal/1491
Languageen angielski
Score (nominal)100
Score sourcejournalList
ScoreMinisterial score = 100.0, 07-04-2020, ArticleFromJournal
Publication indicators Scopus SNIP (Source Normalised Impact per Paper): 2018 = 2.169
Citation count*
Cite
Share Share

Get link to the record


* presented citation count is obtained through Internet information analysis and it is close to the number calculated by the Publish or Perish system.
Back
Confirmation
Are you sure?