Simultaneous Analysis of Insurance Participation and Acreage Response from Subsidized Crop Insurance for Cotton

US crop insurance is subsidized to encourage producers participate and reduce their risk exposure. However, what has been the impact of these subsidies on demand acres planted? Using a simultaneous system two equations, we quantify both participation acreage response for cotton-producing counties across at national regional levels. We also realized rate return expected subsidy per pound, plus combined effects yield price while accounting adoption Bacillus thuringiensis (Bt) technology other factors. Results show that unit production have statistically significant positive effect percentage arable planted. Furthermore, marginal much more low- than high-yield counties. indicate not all regions respond same should be based dollars rather less distorting. Overall, cotton estimated inelastic (0.58) participation.