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1 results

  • Subsidy Incidence in Privately Negotiated Spot Markets: Experimental Evidence

  • Mohammad Maksudur Rahman, Christopher T. Bastian, Chian Jones Ritten, Owen R. Phillips
  • Journal:
    Journal of Agricultural and Applied Economics / Volume 51 / Issue 2 / May 2019
    Published online by Cambridge University Press:
    07 February 2019, pp. 219-234
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  • We use experimental methods to investigate subsidy incidence, the transfer of subsidy payments from intended recipients to other economic agents, in privately negotiated spot markets. Our results show that market outcomes in treatments with a subsidy given to either buyers or sellers are significantly different from both a no-subsidy treatment and the competitive prediction of a 50% subsidy incidence. The disparity in incidence across treatments relative to predicted levels suggests that incidence equivalence does not hold in this market setting. Moreover, we find no statistical difference in market outcomes when benefits are framed as a “subsidy” versus a schedule shift.