Implementable Ramsey-Boiteux Pricing in Agricultural and Environmental Policy

Agricultural producers frequently face price discrimination that is based either on characteristics of their products, or on the physical manner in which the product is produced. We consider how to set such discriminatory prices optimally and show that for a very broad range of production technologies, the first-best voluntary policy, which involves a modified version of Ramsey-Boiteux pricing, is implementable even in the presence of hidden knowledge by farmers about their types. Copyright ©2007 American Agricultural Economics Association.