FOOD SECURITY PART 2:

MICROECONOMIC FUNDAMENTALS

TOPIC 3:

PRODUCTION EFFICIENCY AND POLITICAL REGIME

Production Efficiency and Political Regime 







How to organize agricultural production? Through private land ownership and markets or collective land ownership and central planning? Empirical evidence, for example, suggests that socialist countries in Central and Eastern Europe had 20% less cereal yield per hectare than market-based Western European countries. Socialism eventually collapsed, because socialist planners failed to fill shelves in stores with food. An important question therefore is: How does the economic system affect production?

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility

Production Efficiency and Political Regime A Simple Model of Comparative Incentive Compatibility 

A comparison of the two utilities 1

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U(S) 0.6

0.5

0.4 0

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0.2

0.3

0.4

0.5

Alpha

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0.7

0.8

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Production Efficiency and Political Regime 

A Simple Model of Comparative Incentive Compatibility 

Policy implications  

A market system is important for agricultural efficiency. What constitutes an efficient market system?    

Secure absolute (as opposed to relative) property rights. Access to agricultural finance Complementary public investments into roads, highways, and ports. Absence of price and production subsidies

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