Decoupled Programs, Payment Incidence, and Factor Markets: Evidence from Market Experiments

We use laboratory market experiments to assess the impact of asymmetric knowledge of a per-unit subsidy and the effect of a decoupled annual income subsidy on factor market outcomes. Results indicate that when the subsidy is tied to the factor as a per-unit subsidy, regardless of full or asymmetric knowledge for market participants, subsidized factor buyers distribute nearly 22 percent of the subsidy to factor sellers. When the subsidy is fully decoupled from the factor, as is the case with the annual payment, payment incidence is mitigated and prices are not statistically different from the no-policy treatment.


Issue Date:
2011
Publication Type:
Conference Paper/ Presentation
PURL Identifier:
http://purl.umn.edu/104108
Total Pages:
23
JEL Codes:
Q18; D03; C92
Series Statement:
Selected Paper
12780




 Record created 2017-04-01, last modified 2017-08-26

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