This study aims to assess the costs and benefits of the Thai agricultural diversification policy in 1994–96. Three competitive crops (rice, soybeans and mungbeans) are selected in two provinces to study their comparative advantages in terms of a policy analysis matrix. The results suggest that rice is more profitable than soybeans and mungbeans, implying that government intervention may incur efficiency losses. Some sensitivity analyses, however, suggest that potential price changes, increasing water scarcity, and the effects of crop production on the environment are important concerns which may justify government intervention.
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Shujie Yao (1997) studied this question.