731402 Welfare economic analysis of agricultural policy - theory and applications

Semester hours
Lecturer (assistant)
Salhofer, Klaus
Offered in
Sommersemester 2023
Languages of instruction


Agriculture is one of the most regulated and subsidized economic sectors. Normative economics aims to asses, compare and rank agricultural policies. Starting with Griliches (1958), Nerlove (1958), and Wallace (1962) agricultural economists have been using normative (welfare) economics to judge agricultural policy. Since then, a huge body of literature has evolved.

The way normative economics has been utilized in agricultural policy analysis is to some degree different from other economic branches. First, agricultural economic research is relatively applied. Hence, an assessment of an agricultural program is typically based on measurement of consumer and producer surplus behind Marshallian demand and supply curves, rather than on a marginal analysis in a general equilibrium context as common in other fields like public economics. Second, normative analysis of agricultural policy often goes beyond estimating Harberger triangles of deadweight losses, taking explicitly into account policy objectives.

Course Outline

•A Simple Example of Normative Agricultural Policy Analysis
•Objectives of Agricultural Policy
•Some Principles of Welfare Economics

2.A General Framework of Agricultural Policy Analysis
•Graphical Representation
•Analytical Representation

3.Analyzing Traditional Policy Instruments
•Analyzing Policies with One Objective
•Analyzing Policies with Multiple Objectives

4.Analyzing New Policy Instruments
•Coupled Direct Payments
•Decoupled Direct Payments

•Policy Analysis with Probability Distributions

6.Summary: What Did We Learn?

Previous knowledge expected

microeconomics (master level), agricultural policy (master level)

Objective (expected results of study and acquired competences)

The aims of this course are fourfold:

1.) Help students to better understand normative agricultural policy analysis by providing a general framework. Looking at policy analysis through this frame reveals helpful general insights.

2.) Learning the most important ideas and theorems from 50 year of (agricultural) policy analysis.

3.) Guiding students through the huge body of literature on agricultural policy analysis and providing starting points (important references) for their own work

4.) Introduce them to applied agricultural policy analysis by jointly reading and discussing key papers of the literature.

You can find more details like the schedule or information about exams on the course-page in BOKUonline.