OUTCOMES OF GOVERNMENT CORN SUPPORT POLICIES UNDER ALTERNATE ASSUMPTIONS OF RISK

An existing stochastic policy simulation model (FEEDSIM) is adapted to endogenize price risk. Estimates of elasticities with respect to pric e risk for corn and soybean acreage response are used. Alternate progr am scenarios are simulated without considering risk endogenous and con sidering the effect of endogenous price risk on acreage response. Simu lations without considering price risk endogenous suggest greater bene fits to government programs than simulations that consider price risk endogenous. Also, programs that reduce risk do not necessarily yield t he greatest net social benefit. Not considering endogenous price risk may lead to erroneous conclusions about the benefits from government p rograms.