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Acknowledgements Coming from a working-class urban neighbourhood of Tallinn, the closest I have ever got to farming and agriculture was when, as a child, I used to help out my grandmother, who lives in an apartment in a small village not far from Tallinn, and who used to grow, as a horticulture enthusiast, various plants and vegetables on a plot that is smaller than most peoples’ houses. She had never thought that people should(and do) get money from the government for working the soil, before I jokingly asked her whether she had ever applied for the Single Farm Payment. She, however, seems to be an exception among people who farm, either as a hobby or for living. This sheds light on the reason I wrote this thesis on the CAP. I have a deep fascination with political economy and I am particularly interested in policies, institutions and international relations systems that produce clearly pareto-inefficient outcomes which tend to persist despite their socially undesirable consequences. The questions that I repeatedly ask myself as I encounter stories to fit this description are, firstly, ‘how do some people come up with something so ludicrous?’ and, secondly, when confronted with a fait accompli, ‘why are people incapable of devising side-payments to move the society closer to a pareto-optimal equilibrium?’ Needless to say, the CAP offers boundless opportunities to ask these questions. There are a few persons to whom I would like to give credit. Firstly, I am thankful to my parents, Heli and Raul, who have supported me throughout my studies in CEU and elsewhere. Without their moral and financial supports, I would not be where I am now. Secondly, I would like to thank my lovely fiancée, Sau Kan Chan, who has made sure that I never feel bored or lonely in Budapest. Many ideas used in this thesis were first discussed with her. Thirdly, I would like to thank my supervisor, Professor László Csaba who has been an inspiring figure for me and whose classes have greatly advanced my knowledge of political economy. He is 4