Impact of Subsidies on Farm Productivity and Efficiency

Part of the Studies in Productivity and Efficiency book series (SIPE, volume 7)


This chapter analyses the impact of subsidy payments on farm productivity and efficiency. More knowledge about how farm productivity and efficiency are affected by subsidies could help policy makers introduce better targeted agricultural policies. In almost all studies, subsidies are treated as exogenous. This chapter examines how subsidy payments influence farm productivity and technical efficiency when subsidies are treated as an endogenous variable in productivity and inefficiency models. The study is based on an unbalanced panel data from Norwegian grain farms during 1991–2006. Results show that subsidies negatively affected farm productivity but had a positive influence on technical efficiency.


Technical Efficiency Technical Inefficiency Target Price Price Support Technical Efficiency Score 



Comments from Agnar Hegrenes on an earlier version of the chapter are gratefully acknowledged. The Research Council of Norway provided financial support for this study.


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© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Department of EconomicsState University of New YorkBinghamtonUSA
  2. 2.Norwegian Agricultural Economics Research InstituteOsloNorway
  3. 3.Faculty of Social ScienceLillehammer University CollegeLillehammerNorway

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