Do producers have an incentive to increase sales to get larger government contributions?
The nature of the program design of NISA requires that its effect on production decisions be examined in stages. Figure 3 describes these stages. Figure 3: Scale of Government Contributions to NISA Account In the first stage, for contributions below 3 percent of NES, producers can increase their contributions (as percentage of NES) without increasing NES and still get more matching government payments. In the second stage at contributions above 3 percent of NES, the producer can continue to contribute up to another 20 percent of NES and receive a 3 percent interest bonus above regular interest rates, but no additional government contribution above 3 percent of NES is provided. At this second stage, the only way that the producer can earn additional government contributions is to increase NES. In stage 3, at $250,000 in NES the government contribution is at a maximum-there is nothing that the producer can do to increase the size of the government contribution and the payment can be cons
