Journal or Book Title
American Journal of Agricultural Economics
First Page or Article ID Number
“Agriculture by contract” () is the main Mexican government program aimed at mitigating price risks for agricultural producers in Mexico. [Math Processing Error] has unique features involving forward contracts and the provision of basis subsidies and subsidized exchange-traded futures options for both producers and intermediaries. A simulation model is developed to analyze the market and welfare effects of [Math Processing Error]. When applied to corn, results show that [Math Processing Error] exerts substantial impacts and causes large transfers across sectors. Even if [Math Processing Error] reduced intermediaries' market power to the largest extent feasible, results indicate that it would still cause important losses in aggregate welfare.
Lence, Sergio H., "Modeling the Market and Welfare Effects of Mexico's “Agriculture by Contract” Program" (2015). Economics Publications. 71.