Optimal producer behavior in the presence of area-yield insurance is studied. The producer's optimal production and insurance choices are characterized. The effect of the provision of area-yield insurance on production patterns is studied, and sufficient conditions for the provision of...

Adverse selection is often blamed for crop insurance indemnities exceeding premiums plus subsidies. However, nationwide empirical evidence has been lacking or based on inadequate county-level data. This article uses nationwide farm-level data on corn and soybeans to decompose incentives for...

The state-contingent properties of the most frequently used representations of stochastic production in the agricultural-economics literature are examined. Particular attention is paid to the cases of multiplicative uncertainty, additive uncertainty, and the Just-Pope production function....

A decomposition of input adjustments for stochastic technologies is developed and applied to the case of actuarially fair production insurance. The decomposition consists of a pure-risk effect and an expansion effect which are analogous to the Hicks-Allen decomposition familiar from consumer...

This article studies the comparative statics of output subsidies for firms, with monotonic preferences over costs and returns, that face price and production uncertainty. The modeling of deficiency payments, support-price schemes, and stochastic supply shifts in a state-space framework is...

Cost functions dual to stochastic production technologies are derived and their properties are discussed. These cost functions are shown to be consistent with expected-utility maximization without placing serious structural restrictions on the underlying technology. Copyright 1998, Oxford...

An analytically simple and tractable approach to firm-level welfare analysis of complete and partial mean-preserving price stabilization for producers with general risk-averse preferences facing a stochastic technology is developed. Necessary and sufficient conditions for price stabilization to...