Comparative analysis of price support versus fertilizer subsidy for achieving rice self-sufficiency in Bangladesh
1987
Md Mozibur Rahman
The Nerlove distributed lag model and ordinary least squares model were adopted to estimate the rice supply functions. The ordinary least squares (OLS) and autoregressive procedure were used in the estimation. The analysis was based on national aggregate time-series data for the period 1971-1972 to 1984-1985. Based on the estimated supply parameters, cost and benefit of the price support and fertilizer subsidy policy was calculated employing the demand supply model designed by Barker and Hayami (1976). The result shows that price support and fertilizer subsidy are equally capable of increasing rice production up to the level of self-sufficiency. The estimated price elasticity of rice supply is 0.07 and the output supply elasticity with respect to fertilizer price is also 0.063. As regards the cost and benefits, results show that total social benefit is substantial under both programs but the net social benefit is negative for both the programs. The budgetary burden of the price support program is much heavier in the case of price support policy.
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