European Union: Shadow WTO agricultural domestic support notifications

The notification of the level of domestic support to the World Trade Organization (WTO) is intended to reflect compliance with obligations entered into at the time of the Uruguay Round. WTO members have often been slow to provide notification of domestic support levels. This makes the process of notification less useful as an indicator of the degree to which changes in policy have or have not benefited the trade system as a whole and exporting countries in particular. The notification of domestic support in the E.U. illustrates the value of a measure that reflects current policies and can therefore act as a basis for negotiation of further disciplines where these are necessary. The E.U. has made major changes in its Common Agricultural Policy (CAP) over the period since 1992 when the MacSharry reforms were implemented. Payments originally notified in the blue box (related to supply control) have over time been changed until in their present form they are unrelated to current production or price levels, and hence can satisfy the criteria for the green box. The E.U. has therefore much more latitude in trade talks to agree to reductions in the allowable trade-distorting support. This paper reproduced the E.U. notifications relating to 2003/04 and extends these with official statistics to the year 2006/07. It then projects forward the components of domestic support until the year 2013/14, based on forecasts of future production and estimates of policy parameters. The impact of a successful Doha Round is simulated, showing that the constraints envisaged in the WTO draft modalities document of May 19, 2008, would be binding by the year 2013, at about the time the next budget cycle in the E.U. starts. Without the Doha Round constraints, further reform might still happen for domestic reasons, but the framework provided by the WTO for domestic policy spending would be less relevant. In that case, much could hinge on the legitimacy of the Single Farm Payment system under the current rules governing the green box.

Effects of beverage alcohol taxes and prices on drinking: a meta-analysis of 1003 estimates from 112 studies

Aims: We conducted a systematic review of studies examining relationships between measures of beverage alcohol tax or price levels and alcohol sales or self-reported drinking. A total of 112 studies of alcohol tax or price effects were found, containing 1003 estimates of the tax/price–consumption relationship. Design: Studies included analyses of alternative outcome measures, varying subgroups of the population, several statistical models, and using different units of analysis. Multiple estimates were coded from each study, along with numerous study characteristics. Using reported estimates, standard errors, t-ratios, sample sizes and other statistics, we calculated the partial correlation for the relationship between alcohol price or tax and sales or drinking measures for each major model or subgroup reported within each study. Random-effects models were used to combine studies for inverse variance weighted overall estimates of the magnitude and significance of the relationship between alcohol tax/price and drinking. Findings: Simple means of reported elasticities are -0.46 for beer, -0.69 for wine and -0.80 for spirits. Meta-analytical results document the highly significant relationships (P < 0.001) between alcohol tax or price measures and indices of sales or consumption of alcohol (aggregate-level r = -0.17 for beer, -0.30 for wine, -0.29 for spirits and -0.44 for total alcohol). Price/tax also affects heavy drinking significantly (mean reported elasticity = -0.28, individual-level r = -0.01, P < 0.01), but the magnitude of effect is smaller than effects on overall drinking. Conclusions: A large literature establishes that beverage alcohol prices and taxes are related inversely to drinking. Effects are large compared to other prevention policies and programs. Public policies that raise prices of alcohol are an effective means to reduce drinking.

Do personality traits predict ‘complaining’ consumers?

Although the effects of personality traits on complaining behaviour emerged in the early 1980s, there is limited research in the service industry. The purpose of this study is to examine whether consumer personality traits influence intentions to complain and whether product price and product types moderate the relationship between personality traits and intentions to complain in the retail industry. The research model is tested by logistic regression analysis on two groups of consumers who report passive and active complaining intentions. The study reveals that conscientious consumers who are open to new experiences tend to have higher intentions to complain. Being extroverted does not have any influence on complaining behaviour. Whilst price levels (low/high) and product types (grocery, clothing and electronics) improve the predictive ability of the complaining behaviour, the interaction effects relating to the three personality traits are statistically insignificant. Theoretical and managerial implications of the study findings are discussed.

Forecasting annual inflation with seasonal monthly data: using levels versus logs of the underlying price index

This paper investigates whether using natural logarithms (logs) of price indices for forecasting inflation rates is preferable to employing the original series. Univariate forecasts for annual inflation rates for a number of European countries and the USA based on monthly seasonal consumer price indices are considered. Stochastic seasonality and deterministic seasonality models are used. In many cases, the forecasts based on the original variables result in substantially smaller root mean squared errors than models based on logs. In turn, if forecasts based on logs are superior, the gains are typically small. This outcome sheds doubt on the common practice in the academic literature to forecast inflation rates based on differences of logs.

How contractors price risk in bids: theory and practice

Formal and analytical models that contractors can use to assess and price project risk at the tender stage have proliferated in recent years. However, they are rarely used in practice. Introducing more models would, therefore, not necessarily help. A better understanding is needed of how contractors arrive at a bid price in practice, and how, and in what circumstances, risk apportionment actually influences pricing levels. More than 60 proposed risk models for contractors that are published in journals were examined and classified. Then exploratory interviews with five UK contractors and documentary analyses on how contractors price work generally and risk specifically were carried out to help in comparing the propositions from the literature to what contractors actually do. No comprehensive literature on the real bidding processes used in practice was found, and there is no evidence that pricing is systematic. Hence, systematic risk and pricing models for contractors may have no justifiable basis. Contractors process their bids through certain tendering gateways. They acknowledge the risk that they should price. However, the final settlement depends on a set of complex, micro-economic factors. Hence, risk accountability may be smaller than its true cost to the contractor. Risk apportionment occurs at three stages of the whole bid-pricing process. However, analytical approaches tend not to incorporate this, although they could.

Semi-dwarfing (Rht-B1b) improves nitrogen-use efficiency in wheat, but not at economically optimal levels of nitrogen availability

A UK field experiment compared a complete factorial combination of three backgrounds (cvs Mercia, Maris Huntsman and Maris Widgeon), three alleles at the Rht-B1 locus as Near Isogenic Lines (NILs: rht-B1a (tall), Rht-B1b (semi-dwarf), Rht-B1c (severe dwarf)) and four nitrogen (N) fertilizer application rates (0, 100, 200 and 350 kg N/ha). Linear+exponential functions were fitted to grain yield (GY) and nitrogen-use efficiency (NUE; GY/available N) responses to N rate. Averaged over N rate and background Rht-B1b conferred significantly (P<0.05) greater GY, NUE, N uptake efficiency (NUpE; N in above ground crop / available N) and N utilization efficiency (NUtEg; GY / N in above ground crop) compared with rht-B1a and Rht-B1c. However the economically optimal N rate (Nopt) for N:grain price ratios of 3.5:1 to 10:1 were also greater for Rht-B1b, and because NUE, NUpE and NUtE all declined with N rate, Rht-Blb failed to increase NUE or its components at Nopt. The adoption of semi-dwarf lines in temperate and humid regions, and the greater N rates that such adoption justifies economically, greatly increases land-use efficiency, but not necessarily, NUE.

Experimental duopolies under price guarantees

In a symmetric differentiated experimental duopoly we test the ability of Price Guarantees (PGs) to raise prices above the competitive levels. Different types of PGs (‘aggressive’ and ‘soft’ price-beating and price-matching) are implemented either as an exogenously imposed market rule or as a business strategy. Our results show that PGs may lead close to the collusive outcome, depending on whether the interaction between duopolists is repeated and provided that the guarantee is not of the ‘aggressive’ price-beating type.