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Agriculture seems to be a difficult sector to manage for most
governments. Developing countries face tough dilemmas in deciding
on appropriate price poli eies to stimulate food production and
maintain stable, preferably low, prices for poor consumers.
Governments in developed countries face similar difficult deci
sions. They are called upon to give income guarantees to farmers
whose incomes are unstable and relatively low when compared to
those in the nonagricultural sector. These guarantees often lead to
ever-increasing budgetary outlays and unwanted agricultural
surpluses. High prices make new investments and the application of
new technologies more attractive than world prices warrant, and a
process is set in motion where technological innovation attains
amomenturn of its own, in turn requiring price policies that
maintain their rates of return. Surpluses are disposed of with
subsidies in domestic markets or in the international market. Price
competition reduces the market share of other exporters, who may be
efficient producers, unless they are willing to engage in subsidy
competition. This lowers export earnings and farm incomes or
depletes the public resources of developing countries that export
competing products. Retaliatory measures have led to frictions and
further distortions of world prices. Every so orten the major
agricultural exporters - the USA, the EC, Aus tralia, or Canada -
accuse one another of unfair intervention. Though they have agreed
to discuss agricultural trade liberalization under GATT
negotiations, if anything, the expenditure on farm support has
continued to increase in both the EC and the USA."
Economic and environmental aspects of energy use continue to hold
the attention of the industry as well as policy makers. Relative
energy prices are often used as a policy tool to influence energy
demand, inter-fuel substitution and energy efficiency, thus also
addressing climate change. This book presents an analysis of the
inter-fuel substitution in industrial sectors in India using
Translog cost functions. Energy use behaviour across industrial
sectors can be inferred from the estimated price and substitution
elasticities. This work is perhaps the first attempt to use a
unique disaggregated energy consumption data for over 1350
firms/plants across 14 industrial sectors. The analysis precedes a
review of literature and theoretical models. We estimate separate
models for the basket of energy purchased and that finally used in
the production process. The estimated price and substitution
elasticities are used to assess the impact of a change in energy
prices on energy demand and carbon emissions in 14 Indian
industries. An analysis of energy efficiency in the Indian cement
industry highlights the role of energy prices, choice of technology
and scale economies.
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