I think it would be misleading to say that the sole reason for Feudalism was purely economic in nature -- although, you're perfectly correct in that Diocletian's economic reforms would have had an impact later down the line on what would become the Byzantine empire and the Feudal states of the West. Before launching into Diocletian's economic reforms, however, I'm going to point out a few other problems that would have contributed to the rise of Feudalism:

• long borders - this certainly wouldn't have helped with the rapidly destabilisation of the central Roman government, especially as the Germans and Persians were pressing in on either side. We see evidence of destabilisation with the 4th century sack of Rome, the absolutely abysmal campaign into Persia by Gordian in 241, followed by Shapor invading Armenia in 253 and the capture of Valerian.
• lack of stable leadership - this applies to both before and after Diocletian (though after Diocletian there is a time of stability under the Constantinian dynasty and the early Theodosian dynasty). Especially before, where there were over 60 emperors between 235 and 284
• the old senate vs army issue - this had been going on since the time of Augustus, but the practice of adlocutio and private armies loyal to a single general would only get worse in the 3rd century and beyond. Specifically it leads to the rise of local warlords, which is essentially what Feudalism is: local warlords looking after land and the people living under them. A very early example is shown in an inscription from Sisteron in the 5th century which says:

"Claudius Postumus Dardanus, an illustrious man of patrician rank, former consul of the province of Vienne, secretary of State for judicial petitions, quaestor, praetorian prefect of Gaul, and Nevia Galla, a woman of the senatorial order, his wife. In the place that has the name Theopolis, they provided the use of the roads that pierced the mountains on both sides; they gave walls and city gates, which, established on their own lands were intended to provide a safe refuge for all."

• and last but not least - the difficulties in enforcing imperial will across the Roman empire as all of these effects combined to destabilise the central government. The Seat of the Gallic Prefecture was shifted South from Trier to Arles in 406, which certainly doesn't give a good indication of how well the empire was able to safeguard their interests at the periphery. Moreover we get another great glimpse of this problem from an edict in the Codex Theodosianus c. 392 which says:

"It is our will that this reglation shall be so enforced by the magistrates, as well as by the decurions of the cities, that the information learned by the defenders and decurions shall be immediately reported to the courts, and the crimes [pagan rites] so reported will be punished by the magistrates. Moreover if the defenders and decurions should conspire to conceal any such crime because of favoritism, or the crimes are overlooked because of carelessness, they shall be subjected to judicial indignation. If the magistrates are advised of such crimes and they defer punishment through connivance, they shall be fined 30 pounds of gold; their office staff will be fined an equal amount" (CT 16.10.12.4).

Alright! Now that we've settled that, let's look at economics! You mentioned a few of the issues Diocletian would have been up against (namely: taxes in kind), but there also would have been the problems of: devaluation of currency, rampant inflation, and coin hoarding. There would have been three main points of legislation Diocletian instituted in order to combat these problems:

• Price Edict
• iugatio
• captatio

The iugatio was a tax based on the productivity of the land and whatever that land produces, while captatio was a head tax paid by every single person in the empire. Both of these taxes would have extended all the way through until the reign of Justinian II. I think the duration of this tax (through to the East, in any case) gives some notion as to how much effect it would have had on the empire -- not all entirely good, either. Large swathes of taxes to a central government you almost never hear from (except for when they're wanting money) certainly wouldn't have been a balm to the rise in self-interest and warlords in the West. Aurelius Victor comments on the increase of taxes in Italy during the reign of the first Tetrarchy under Diocletian:

"And because the pressure of the wars, which I wrote about above, was increasing rapidly, in a four-part division of power, all the lands of Gaul, on the other side of Alps, were handed over to Constantius; Africa and Italy were given to Herculius; the land from the border of Illyricum all the way to the Sea of Pontus was given to Galerius; Valerius retained the rest of the empire. Finally the great evil of taxes was inflicted upon part of Italy. For although he was pursuing a reasonable policy of equal revenue collection everywhere, a new law was introduced for taxes, by which the army and emperor, who are present always or most of the time in Italy, would be sustained. Admittedly the tolerable moderation of those times had advanced to the ruin of these days" (Aur. Vic. Caes. 39.30-32).

Diocletian's infamous Price Edict would have been a futile way to try to combat inflation. Ironically it only added to his problems. It attempted what other emperors had done before with currency decrees, but it also put price caps on hundreds of products and wages and the like in an attempt to control spending and earning. What most people -- even today, as well as in the ancient world -- didn't really understand about inflation, though, is that the value of money does not rely upon the material of the money itself, but upon the productivity of the person or nation or organisation it represents. Coins made of gold or modern paper money made of plastic both have limited intrinsic value. When Diocletian put a cap on wages, workers found that the money they were earning was essentially worthless, which actually resulted in more basic forms of trade, such as barter or taxes being paid in kind -- since the value of an actual physical product would have been far greater than any currency at the time. (We can speculate a bit here and say that perhaps rather than institute a price cap, he should have increased supply -- easier said than done, however).

Overall I think Diocletian's economic reforms, while well intended, ultimately did as much harm as they did good. Keith Hopkins in his article Taxes and Trade in the Roman Empire makes the astute claim that, "...the Romans' imposition of taxes paid in money greatly increased the volume of trade in the Roman empire...[and] Secondly, in so far as money taxes were levied on conquered provinces and then spent in other provinces or in Italy, then the tax-exporting provinces had to earn money with which to pay their taxes by exporting goods of an equal value." (Hopkins, 101). Things like taxes in kind, which was a rampant practice in the 3rd century, but which was largely discontinued by Constantine (only to resurface later), would have had more of an effect on the Roman economy than what percentage of coins was comprised of gold or silver, since taxes in kind severely limit trade and undermine not the intrinsic value but the representative value of money. Moreover by 350 AD Peter Brown notes that, "[Taxation] reached more than one-third of a farmer's gross income" (Brown, The World of Late Antiquity, 36). Over one-third of a farmer's gross income. That's pretty massive. Especially for a poor farmer. Cripes.

This sort of economic strain would have only added to other issues I've listed above, and aided in the dissolution of the West into Feudalism, and the rise of the Byzantine Empire in the East.