A TWO-STAGE MODEL OF THE DEMAND FOR SPECIALTY CROP INSURANCE

Recent proposals to reform the federal Multiple-Peril Crop Insurance Program for specialty crops raised concerns that a higher cost for catastrophic-level coverage would significantly reduce program participation. This study estimates the demand for three levels of insurance coverage (50%, 65%, 75%) using aggregate data from grape production in 11 California counties from 1986-96. A discrete/continuous econometric model of the choice of coverage level and the amount of insurance finds that the price-elasticity of demand for 50% coverage is elastic, suggesting that premium increases may indeed reduce participation significantly. Such increases may also cause a significant reallocation of growers among coverage levels.


Issue Date:
2000-07
Publication Type:
Journal Article
PURL Identifier:
http://purl.umn.edu/30828
Published in:
Journal of Agricultural and Resource Economics, Volume 25, Number 1
Page range:
177-194
Total Pages:
18




 Record created 2017-04-01, last modified 2017-04-17

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