Journal or Book Title
Journal of Agricultural and Resource Economics
First Page or Article ID Number
This paper investigates the effects of first-best policies to regulate nitrogen application. Some nitrogen fertilizer is applied ex ante before a random rainfall, but side dressed nitrogen may be applied ex post. First-best policy is a tax or a quota on ex ante application, because side dressed nitrogen is not leached. Since a risk-averse farmer uses more nitrogen ex ante than a risk-neutral farmer, a higher tax must be imposed on the former. Action equivalent first-best taxes and quotas are also welfare equivalent. An empirical model for wheat in Israel was used to demonstrate the analytical
Western Agricultural Economics Association
Choi, E. Kwan and Feinerman, Eli, "Regulation of Nitrogen Pollution: Taxes versus Quotas" (1995). Economics Publications. 108.