Budget constrained tax policy under price uncertainty: implications for supply control

Tax policies that constrain net transfers between the farm sector and the fisc are modeled under price uncertainty. Increasing the level of tax on profits causes the firm to expand output. Implications are derived for supply control and the distributions of profits and net receipts at the fisc.

Market power and its effects on equilibrium in the food system

When food processors have conjectures about rival firms' responses, their profit functions can be used to estimate the degree of market power in the food system. The effects of this power are investigated analytically and through applying the results to the U.S. pork sector

Comparing hypotheses about competition in the food system

A procedure is presented for comparing hypotheses about competition that makes no parametric assumptions about cost and demand functions, can be implemented with a modicum of data, and relies on Bayesian comparisons of non-nested hypotheses. The methodology is applied to data on five of the major U.S. food industries

Keeping the dream of rigorous hypothesis testing alive

This article reviews recent work on hypothesis testing in the American Journal of AGricultural Economics and its predecessor journal, the Journal of Farm Economics

Admissible conjectures and consistent conjectures

Firms' conjectures are consistent if their ex post behavior rationalizes their ex ante beliefs. Admissible conjectures are those that satisfy the necessary conditions for consistency. Competition is inadmissible unless aggregate output is stationary. Relaxing this restriction, admissibility eliminates Cournot behavior and constrains conduct to be collusive

Consistent comparative statics for the food industries

Consistent conjectures are derived in an oligopoly model with homogeneous products and identical firms. The exercise uncovers two important findings. Absent entry, the monopolistic conjecture, is the unique consistent conjecture. With endogenous entry, no consistent conjecture exists. These results provide foundations for deriving consistentc omparatives taticsf or the food industries

A characterization of the food industries

Consistent conjectures applied to the food industries are investigated. This is a homogeneous-product, quantity-setting model with identical firms. When firm numbers are fixed, the consistent conjecture is monopolistic. When variable, consistency requires firm output to expand with exit and contract with entry, but no conjecture exists that is consistent with equilibrium.

Safety and quality and stage of distribution

Let 0 denote the level of quality inherent in a food product that is delivered to some terminal market. In this paper, I characterize allocations over 0 and provide an economic rationale for regulating safety and quality standards in the food system. Zusman and Bockstael investigate the theoretical foundations for imposing standards and stress the importance of providing a tractable conceptual foundation. Despite a wealth of contributions that are mainly empirical (for reviews of these works see, respectively, Caswell and Antle), there have been relatively few attempts to model formally the linkages between farm and food markets when food quality and consumer safety are at issue. Here, I attempt to provide such a framework, building on key contributions in the theoretical literature and linking them in a simple model of quality determination in a vertically related marketing channel. The food-marketing model is due to Gardner. Spence provides a foundation for Pareto-improving intervention in a deterministic model of quality provision, and Leland, building on the classic paper by Akerlof, investigates licensing and minimum standards when the information structure is incomplete. Linking these ideas in a satisfactory model of the food markets is the main objective of the paper.

A coherent procedure for inferring conduct

We exploit a theory of price linkages that lends itself readily to empirical examination using Markovchain, Monte Carlo methods. The methodology facilitates classification and discrimination among alternative regimes in economic time series. The theory and procedures are applied to annual series (1955-1992) on the U.S. beef sector

Measuring research benefits in an imperfect market: second comment

This note generalizes a finding about the necessary and sufficient conditions for research to generate greater benefits in the presence of distortions and highlights a significant source of bias in conventional cost-benefit calculations

Excise taxes and commodity promotion bayesian retrieval of the optimum

This article shows how the solution to the promotion problem—the problem of locating the optimal level of advertising in a downstream market—can be derived simply, empirically, and robustly through the application of some simple calculus and Bayesian econometrics. We derive the complete distribution of the level of promotion that maximizes producer surplus and generate recommendations about patterns as well as levels of expenditure that increase net returns. The theory and methods are applied to quarterly series (1978:2S1988:4) on red meats promotion by the Australian Meat and Live-Stock Corporation. A slightly different pattern of expenditure would have profited lamb producers

Reworking the NAFTA: departures from traditional frameworks

This paper reviews the treatment of intellectual property rights in the North American Free Trade Agreement (NAFTA) and considers the welfare-theoretic bases for innovation transfer between member and nonmember states. Specifically, we consider the effects of new technology development from within the union and question whether it is efficient (in a welfare sense) to transfer that new technology to nonmember states. When the new technology contains stochastic components, the important issue of information exchange arises and we consider this question in a simple oligopoly model with Bayesian updating. In this context, it is natural to ask the optimal price at which such information should be transferred. Some simple, natural conjugate examples are used to motivate the key parameters upon which the answer is dependent

Tobit estiamtion with unknown point of censoring with an application to milk market participation in the Ethiopian highlands

Data augmentation is a powerful technique for estimating models with latent or missing data, but applications in agricultural economics have thus far been few. This paper showcases the technique in an application to data on milk market participation in the Ethiopian highlands. There, a key impediment to economic development is an apparently low rate of market participation. Consequently, economic interest centers on the “locations” of nonparticipants in relation to the market and their “reservation values” across covariates. These quantities are of policy interest because they provide measures of the additional inputs necessary in order for nonparticipants to enter the market. One quantity of primary interest is the minimum amount of surplus milk (the “minimum efficient scale of operations”) that the household must acquire before market participation becomes feasible. We estimate this quantity through routine application of data augmentation and Gibbs sampling applied to a random-censored Tobit regression. Incorporating random censoring affects markedly the marketable-surplus requirements of the household, but only slightly the covariates requirements estimates and, generally, leads to more plausible policy estimates than the estimates obtained from the zero-censored formulation