Notes on market failure and the Paretian (Kaldor-Hicks) relevance and irrelevance of unfavourable externalities

The following are notes that have been distributed by me over the last few years to students in Environmental Economics at The University of Queensland. They give particular attention to whether externalities are Pareto or Kaldor-Hicks relevant from a policy point of view. Externalities are Kaldor-Hicks or Pareto irrelevant if no change is possible for which gainers could compensate losers. Both absolute and marginal externalities may be Kaldor-Hicks relevant. Infra-marginal negative externalities are often, but not always, Kaldor-Hicks irrelevant. There are at least two cases where such externalities can be relevant. First, the absolute impact of the negative externality may be so great that the source of the externality should be eliminated. Secondly, if the externality arises from production, its nature may depend on the type of production technique adopted. Although for the technique adopted, an infra-marginal negative externality occurs. That is Paretian irrelevant given that choice of this technique is the only available possibility, alternative techniques may actually be available in practice. Some of these may generate even smaller total external effects and be socially preferable. Both cases are outlined and illustrated in these notes. The analysis reveals the dangers of relying on marginalism for deciding on environmental policy. Total (external) effects are often of great social and economic importance and appropriate social choices cannot be made on the basis of marginalism alone.

Testing for Market Power in Multiple-Input, Multiple-Output Industries: The Australian Grains and Oilseeds Industries

Recent empirical studies have found significant evidence of departures from competition in the input side of the Australian bread, breakfast cereal and margarine end-product markets. For example, Griffith (2000) found that firms in some parts of the processing and marketing sector exerted market power when purchasing grains and oilseeds from farmers. As noted at the time, this result accorded well with the views of previous regulatory authorities (p.358). In the mid-1990s, the Prices Surveillence Authority (PSA 1994) determined that the markets for products contained in the Breakfast Cereals and Cooking Oils and Fats indexes were "not effectively competitive" (p.14). The PSA consequently maintained price surveillence on the major firms in this product group. The Griffith result is also consistent with the large number of legal judgements against firms in this sector over the past decade for price fixing or other types of non-competitive behaviour. For example, bread manufacturer George Weston was fined twice during 2000 for non-competitive conduct and the ACCC has also recently pursued and won cases against retailer Safeway in grains and oilseeds product lines.

International market selection: Developing a model from Australian case studies

This paper develops a theory that firms seek out new country markets on the basis of expected commercial returns. These expectations depend on judgements about the attractiveness of the market and the firm's competitive position in it, which in turn are influenced by informants. It is the number and strengths of these informants that will underlie the probability of a country being identified and assessed as a new market by any firm.

A critical comparison of the external and internal boron requirements for contrasting species in boron-buffered solution culture

Despite reports that boron (B) requirements differ among plant species there is a shortage of critical evidence to demonstrate unequivocally whether species differ in internal or external B requirements or both. The present research was conducted to establish the external and internal B requirements of three contrasting species, a woody dicot (marri), an herbaceous dicot (sunflower) and a monocot (wheat) using B-buffered solution culture. Boron-buffered solution culture provided satisfactory control of external B concentrations ranging from 0.04 to 30 muM throughout the 20- (sunflower and wheat) or 40-day (marri) growth period. At low external B concentrations (less than or equal to 0.13 muM), the growth of marri and sunflower was severely depressed but by contrast the vegetative growth of wheat plants was satisfactory and free of B deficiency symptoms. Marri and sunflower plants achieved total maximum shoot growth at greater than or equal to1.2 muM B in solutions while wheat plants did so at greater than or equal to 0.6 muM B. The critical B concentrations (mg kg(-1) dry matter) in the youngest open leaf blades of marri, sunflower and wheat plants were 17.9, 19.7 and 1.2 on 20, 10 and 10 days after transplanting (DAT), respectively. Lower internal and external B requirements of wheat were matched by a lower uptake rate of B compared to marri and sunflower.

Recurrent gains and losses of large (84-109 bp) repeats in the rDNA internal transcribed spacer 2 (ITS2) of rhipicephaline ticks

We studied the internal transcribed spacer 2 (ITS2) in twenty-two spp. of ticks from the subfamily Rhipicephalinae. A 104-109 base pair (bp) region was Imperfectly repeated In most ticks studied. Mapping the number of repeat copies on to a phylogeny from the ITS2 showed that there have been many Independent gains and losses of repeats. Comparison of the sequences of the repeat copies Indicated that in most taxa concerted evolution had played little if any role in the evolution of these regions, as the copies clustered by sequence position rather than species, In our putative secondary structure, each repeat copy can fold into a distinct and almost identical stem-loop complex; a gain or loss of a repeat copy apparently does not impair the function of the ITS2 in these ticks.