Babcock, Bruce A.; Schmitz, A.

Economic Inquiry Vol. 28 (April 1990): 335-352.

Both taxpayer subsidies to U.S. wheat producers and domestic deadweight losses increased as a result of the U.S. wheat program adopted in 1985. A calculation of the costs and benefits of alternative wheat policies shows that mandatory production controls with no taxpayer expense could have made wheat producers as well off as the adopted policy. Becker's theory of competition among interest groups and Peltzman's theory of the equilibrium amount of regulation are shown to be consistent with the observed policy choice if the list of affected interest groups includes agricultural input suppliers and grain marketing firms.