AGRICULTURAL EXPLOITATION AND SUBSIDIZATION: There Is An Explanation

Agricultural products are normally underpriced and many types of urban production subsidized in developing countries. In developed countries agriculture normally shares in the system of subsidies, and in developed countries without comparative advantage in agriculture many farm products are overpriced. The explanation for this difference is related to opportunities for collective action. In developing countries, conditions are not favorable to collective action by farmers. In contrast, collective action is easier in developed countries, and protection makes possible large subsidies to agriculture in those countries with relatively little good land in relation to population.