grading minimum quality standards and the labeling of genetically modified products we relate the labeling of genetically modified gm products to the theory of grading and minimum quality standards the model represents three stages in the supply chain assumes a vertical product differentiation framework allows for the accidental commingling of non gm products and treats regulation as a purity threshold for non gm products we find that a non gm purity level that is too strict leads to the disappearance of the non gm product and that some quality standard benefits farmers indeed the standard that is optimal from the perspective of producers is stricter than what is optimal for consumers and for societal welfare

reversing urban bias in african rice markets evidence from senegal summary urban bias constitutes an important institutional impediment to economic development in poor countries some african governments now recognize that they should invest in agricultural productivity in order to reverse urban bias but often forget the equally important objective of investing in quality tailored to consumers so as to reverse urban bias footprint on food markets we conduct framed field experiments in two major urban markets in senegal and find that the majority of urban consumers are willing to pay quality premiums for local rice suggesting that investment in post harvest rice quality is a priority in the reversal of urban bias 2012 elsevier ltd all rights reserved

comparative advantage in demand and the development of rice value chains in west africa summary national rice development strategies in africa are often supply focused and implicitly assume that consumers will readily substitute imported for domestic rice however due to increasing import dependency urban consumer preferences for rice have become biased toward asian export quality standards against which african rice has difficulties to compete anecdotal evidence suggests that this import bias is higher in cities close to the port and remote from the geographical centers of cultural heritage where african rice was domesticated more than 3 000 years ago we purposely select a sample of five west african urban markets which are supplied by both foreign and domestic rice value chains and which are located at varying distances from the nearest ports and centers of cultural heritage and conduct framed field experiments based on auctions to analyze the drivers of urban demand for domestic rice with upgraded quality characteristics we find that west african rice has increasing difficulties competing against imported rice on urban markets the more consumers appreciate characteristics of imported asian rice the closer to the port and the further the geographical and genealogical distance from rice cultural heritage these challenges provide crucial insights into value chain upgrading in policy makers struggle to achieve rice self sufficiency in west africa our findings suggest that the optimal portfolio of investment in value chain upgrading is a function of the targeted end market and its distance from the port and rice cultural heritage the closer the end market is located toward the port the more investment is needed in lifting demand of domestic rice through quality upgrading branding and promotion to enable it to compete against imported rice proximity to centers of cultural heritage on the other hand endows rice value chains with a comparative advantage in demand requiring less investment in demand lifting and leaving more room for supply shifting investments

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

the behavior of consumer loan rates during the 1990 credit slowdown abstract this study re examines the 1990 credit slowdown by investigating the loan pricing behavior of commercial banks we find strong evidence that large undercapitalized banks contributed to the credit slowdown by charging consumers a higher than average loan rate relative to better capitalized institutions this disparity in lending exists even after accounting for bank funding costs thus we argue that there was a lending slowdown that occurred among large undercapitalized banks the reluctance to lend among undercapitalized banks is at least suggestive of behavior that is consistent with a credit crunch

understanding the motivations behind the myanmar china energy pipeline multiple streams and energy politics in china abstract why exactly did china decide to construct the myanmar china energy pipeline while important for china s long term energy strategy very few studies have yet analyzed the project from the standpoint of china s domestic policy process this paper fills the gap by illuminating the broader historical context and presenting how this pipeline fits into energy politics in china the policy making process is fleshed out by using the multiple streams framework msf analysis of this case using msf shows that first local governments and scholars played a key role in facilitating the project especially in raising the proposal to the government agenda second a policy window remains an important element in china s energy policy decisions in light of the china myanmar pipeline idea was not taken seriously in the 1990s when it was first proposed third although this cross border energy project is part of a national strategy of energy security domestic political considerations such as promoting investment in china s underdeveloped southwest were also at work these conclusions are useful for understanding not only the motivations behind such transboundary pipeline projects but also china s energy decisions at large

consumers response to the eu quality policy allowing for heterogeneous preferences abstract using dry cured ham as an anchor product consumers preferences for eu quality certification schemes region of origin and price have been investigated with conjoint analysis in order to achieve this aim a mixed rank ordered logit which allows for the investigation of heterogeneous preferences and their sources has been estimated in particular we have analysed to what extent consumers socio demographic traits affect their price sensitiveness and whether consumers sensory hedonic valuations and attitudes towards ham with a protected designation of origin pdo affect the preferences for specific attributes results show that consumers with a low medium age and income are more price sensitive consumers more inclined sensorially towards the regional specialty with or without pdo are more likely to purchase this product and consumers with a more favourable attitude towards pdo ham are also more prone to purchase cured ham with quality certification findings also suggest that although the pdo scheme attracts a segment of consumers the origin by itself is still a more powerful signal of quality and more specifically the region of origin

on the deadweight cost of production requirements for geographically differentiated agricultural products this article investigates the welfare effects of alternate producer collusion schemes in a context where collusion is authorized in order to cover fixed costs using a linear equilibrium displacement model we find evidence that when the producer group is allowed to control quota levels an input quota policy entails a smaller absolute deadweight loss than an output quota policy this finding suggests that if producer groups are allowed to resort to production distorting instruments to limit output they will make production choices that are less costly for society than if they had been allowed to directly control output levels copyright 2008 oxford university press

does deposit insurance increase banking system stability an empirical investigation based on evidence of 61 countries in 1980 97 the authors find that explicit deposit insurance tends to be detrimental to bank stability the more so where bank interest rates are deregulated and the institutional environment is weak the adverse impact of deposit insurance on bank stability tends to be stronger the more extensive is the coverage offered to depositors and where the scheme is funded and run by the government rather than the private sector

marshallian vs walrasian stability in an experimental market the experiments discussed below are an attempt to examine concepts of stability as found in economic textbooks two concepts of stability which stem from two different concepts of market adjustment seem to have dominated thinking whilst these two concepts are typically called walras stability and marshall stability some controversy exists over the extent to which these two models represent their respective thinking no doubt the current formal statements of the theories reflect an evolution of the ideas through the work of many theorists the terminology is retained for convenience regardless of their origins these two concepts lead to competing hypotheses about the conditions under which market instability will be observed so the subject is a natural one for experimental investigation furthermore since this is the first experimental examination of the stability of equilibria the strategy is to inquire about stability in the context of these two classical models and to avoid the temptation to attempt to extend them or integrate them with more modern theory the old models have not been checked they seem to be an appropriate place to start

how bad are twins output costs of currency and banking crises we investigate the output effects of banking and currency crises in emerging markets focusing on whether twin crises entail especially large losses recent literature emphasizes the costs of financial crises and suggests that twin crises are particularly damaging to the real economy using a panel data set for 1975 97 we find that currency banking crises are very costly reducing output by about 5 8 8 10 over a 2 4 year period the cumulative loss of both types of crises is therefore very large we do not find however additional feedbacks or interactive effects associated with twin crises further damaging the economy

financial dependence and growth revisited we revisit an earlier highly influential paper on financial dependence and growth by rajan and zingales 1998 we re examine their assumptions and the robustness of their results to alternative theories and interpretations we first show that they may be implicitly testing whether financial intermediaries allow firms to better respond to global shocks to growth opportunities rather than the extent that financial intermediaries allow firms to grow in industries with an inherent technological financial dependence we propose a more direct measure of growth opportunities if u s capital markets are perfect then actual growth in the u s is a good proxy for global growth opportunities we test this directly by including u s industry growth in rajan and zingales s original specification and find that our direct growth measure outperforms their financial dependence measure and is less vulnerable to controlling for outliers and level of development this still suggests an important role for finance in the allocation of resources but shifts the emphasis from financial dependence to global growth opportunities jel f3 g1 o4

geographical indications public goods and sustainable development the roles of actors strategies and public policies summary the protection of geographical indications gis is being explored more and more worldwide as a tool for supporting local sustainable development focusing on wine and coffee value chains this paper will set out in what way gi protection schemes can contribute to the provision of public goods and illustrate how this contribution is being threatened by different failures that may occur within both valorization strategies and legal protection policies by examining how private collective and public interventions front these failures this paper will put forward economic arguments supporting a more comprehensive policy approach to ensure gis contribution to sustainable development

information and bank credit allocation abstract private information obtained by lenders leads to borrower capture to the extent that such information cannot be communicated credibly to outsiders we analyze how this capture affects the loan portfolio allocation of informed lenders first we show that banks charge higher interest rates and finance relatively less creditworthy borrowers in market segments with greater information asymmetries second when faced with greater competition from outside lenders banks reallocate credit toward more captured borrowers flight to captivity third if borrower quality and captivity are sufficiently correlated an increase in the competitiveness of uninformed lenders can worsen the informed lender s overall loan portfolio the model explains observed consequences of financial liberalizations

deposit insurance around the world in the past two decades in a series of banking crises around the world banks have become systematically insolvent these crises have occurred in developed and developing economies alike to make such financial system breakdowns less likely and to limit their costs if they occur policymakers feel the need for financial safety nets these include such policies as implicit or explicit deposit insurance a lender of last resort function of the central bank bank insolvency resolution procedures and bank regulation and supervision of these policies explicit deposit insurance has been gaining popularity in recent years since the 1980s the number of countries with explicit deposit insurance schemes almost tripled with most oecd countries and an increasing number of developing economies adopting some form of explicit depositor protection in 1994 deposit insurance became the standard for the newly created single banking market of the european union establishing an explicit deposit insurance scheme became part of the generally accepted best practice advice given to developing economies

the real output losses associated with modern banking crises this study investigates the real output losses associated with modern banking crises we find a remarkable diversity of experience in a number of instances banking crises have not been associated with any significant reduction in the growth of real per capita gdp often this has been the case in mature and developed economies on the other hand estimated output losses are extremely large for some other countriesnamounting to several years of lost gdp interestingly such large losses can be associated with banking crises that were designated as non systemic our sample mean and median output loss estimates are also big for the average sample country the estimated present discounted value of crisis related output losses is bounded between 63 and 302 of real per capita gdp in the last year before the crisis onset average loss estimates are this large primarily because we find evidence that post crisis economic slowdowns often persist long after the crisis is officially over such delayed costs have been largely overlooked in previous empirical work and resultantly our loss estimates are much larger than those that have appeared elsewhere

the nature of the farm abstract using a model based on a trade off between moral hazard incentives and gains from specialization this paper explains why farming has generally not converted from small family based firms into large factory style corporate firms nature is both seasonal and random and the interplay of these qualities generates moral hazard limits the gains from specialization and causes timing problems between stages of production by identifying conditions in which these forces vary we derive testable predictions about the choice of organization and the extent of farm integration to test these predictions we study the historical development of several agricultural industries and analyze data from a sample of over 1 000 farms in british columbia and louisiana in general seasonality and randomness so limit the benefits of specialization that family farms are optimal but when farmers are successful in mitigating the effects of seasonality and random shocks to output farm organizations gravitate toward fa

on the comparative statics of a competitive industry with inframarginal firms recently economists have begun to develop a theory of the perfectly competitive firm and industry in long run equilibrium in contrast to the traditional model2 in which all prices are parametric this new theory takes explicit recognition of the fact that output price must adjust to exogenous changes in input prices before the industry can be said to be in long run competitive equilibrium the focus of this analysis has been to derive implications of competitive theory which can be tested using data generated by observing individual firms in

strength of protection for geographical indications promotion incentives and welfare effects we address the question of how the strength of protection for geographical indications gis affects the gi industry s promotion incentives equilibrium market outcomes and the distribution of welfare geographical indication producers engage in informative advertising by associating their true quality premium relative to a substitute product with a specific label emphasizing the gi s geographic origin the extent to which the names words of the gi label can be used and or imitated by competing products which depends on the strength of gi protection determines how informative the gi promotion messages can be consumers heterogeneous preferences vis a vis the gi quality premium are modeled in a vertically differentiated framework both the gi industry and the substitute product industry are assumed to be competitive with free entry the model is calibrated and solved for alternative parameter values results show that producers of the gi and of the lower quality substitute good have divergent interests gi producers are better off with full protection whereas the substitute good s producers prefer intermediate levels of protection but they never prefer zero protection because they benefit indirectly if the gi producers incentives to promote are preserved for consumers and aggregate welfare the preferred level of protection depends on the model s parameters with an intermediate level of protection being optimal in many circumstances

intellectual property rights and the world trade organization retrospect and prospects this paper analyzes the main economic issues of intellectual property rights iprs protection in the context of the world trade organization wto a retrospective view on the establishment of the trips trade related aspects of intellectual property rights agreement a still controversial accomplishment of the uruguay round of trade liberalization is provided the paper reviews the economic rationale for the harmonization of iprs drawing both on economic theory considerations as well as emerging empirical evidence the logic of linking ipr protection and trade in the context of the wto is also re examined some specific attention is devoted to the implications of trips for agricultural and biotechnology innovations the impact that ipr protection can have in promoting growth and development and the relation of iprs with other economic policies is discussed the paper concludes with an analysis of the prospects for more or less iprs related consensus in the current round of wto negotiations

on the economics of labels how their introduction affects the functioning of markets and the welfare of all participants are labels good or bad for consumers and firms the answer may seem straightforward since labels improve information yet economic theory reveals situations where their introduction reduces the welfare of at least some market participants this essay reviews the theoretical literature on labels in order to identify and explain the main reasons that may cause labeling to produce undesirable side effects in contrast to earlier reviews that either concentrate on narrow topics or treat the subject in a more or less informal way we bring together the main results from all the relevant topics by presenting and discussing the assumptions and model building techniques that underpin them the advantage of this approach is that it identifies the origin of the differences between results thus allowing the synthesis of results that sometimes appear even to be contradictory we focus on quality labels and examine the impact of labeling on market structure the side effects of costly certification issues related to the label s trustworthiness the rationale for mandatory vs voluntary labeling the level at which the label s standard is set according to the agency that selects it the political economy of labels that is pro or anti label lobbying lobbying to affect the label s standard and lobbying in favor or against the label s mandatory imposition these topics cover a wide range of applications including genetically modified organism gmos organic produce geographic indicators controlled origin eco labels etc we conclude by identifying topics that require further research

multiple versus single banking relationships theory and evidence a theory of the optimal number of banking relationships is developed and tested using matched bank firm data according to the theory relationship banks may be unable to continue funding profitable projects owing to internal problems and a firm may thus have to refinance from nonrelationship banks the latter however face an adverse selection problem as they do not know the quality of the project and may refuse to lend in these circumstances multiple banking can reduce the probability of an early liquidation of the project the empirical evidence supports the predictions of the model

collective reputation social norms and participation this paper analyzes a repeated games model of collective reputation with imperfect public monitoring and perfect local peer monitoring of efforts even when peer monitoring is local firms may achieve higher profits under collective reputation by decreasing the cost of maintaining customers trust the optimal number of firms that share a common reputation is greater when 1 trades are more frequent and public information is disseminated more rapidly 2 the deviation gain is smaller compared to the quality premium 3 customers information regarding firms quality is more precise or 4 intragroup information about firms quality is more global from a positive perspective we suggest how social norms can influence the reputation of regional products we also offer an efficiency explanation for food scares from a normative point of view in our model protection of geographical indications increases and mandatory traceability decreases welfare and incentives to provide quality without taking into account direct implementation costs copyright 2012 oxford university press

how do bank competition regulation and institutions shape the real effect of banking crises international evidence abstract this paper studies the influence of bank competition on the real effect of 36 systemic banking crises in 30 countries over the 1980 2000 period and how this influence varies across countries depending on bank regulation and institutions we find that bank market power is not on average useful for mitigating the negative real effect of a systemic banking crisis market power promotes higher growth during normal times in industries that are more dependent on external finance but induces a bigger reduction in growth during systemic banking crises we also find a country specific effect depending on bank regulation and institutions stringent capital requirements and poor protection of creditor rights increase the benefits of bank market power for mitigating the negative real effect of a systemic banking crisis because bank market power has a positive effect on economic growth during both crisis and non crisis periods in these environments

regulations market structure institutions and the cost of financial intermediation this paper examines the impact of bank regulations market structure and national institutions on bank net interest margins and overhead costs using data on over 1400 banks across 72 countries while controlling for bankspecific characteristics the data indicate that tighter regulations on bank entry and bank activities boost the cost of financial intermediation inflation also exerts a robust positive impact on bank margins and overhead costs while concentration is positively associated with net interest margins this relationship breaksdownwhencontrolling for regulatory impediments to competition and inflation furthermore bank regulations become insignificant when controlling for national indicators of economic freedom or property rights protection while these institutional indicators robustly explain cross bank net interest margins and overhead expenditures thus bank regulations cannot be viewed in isolation they reflect broad national approaches to private property and competition

incomplete adoption of a superior innovation we consider a model in which an innovating monopolist of a technologically superior intermediate input must sell this product to final output producers prior research shows that with complete information the monopolist s optimal strategy will lead to complete adoption of this technologically superior innovation in this article we show that when the price of some competitively supplied input used in the final product market is endogenous and is altered by adoption of the innovation then the optimal pricing strategy of the monopolist may lead to incomplete innovation thus the standard result of complete adoption of the superior technology is partly attributable to the partial equilibrium nature of prior models

regional financial development and bank competition effects on firms growth fernandez de guevara j and maudos j regional financial development and bank competition effects on firms growth regional studies this paper analyses the effect of regional financial development and bank competition on firms growth using the spanish provinces as a testing ground the results show that firms in industries with a greater dependence on external finance grow faster in more financially developed provinces the results also show that bank monopoly power has an inverted u effect on firms growth suggesting that market power has its highest effect at intermediate values the effect is heterogeneous among firms according to the financial dependence of the industry to which they belong this result is consistent with the literature on relationship banking which argues that bank competition can have a negative effect on the availability of finance for more informationally opaque firms fernandez de guevara j et maudos j le developpement financier regional et la concurrence bancaire l imp

geographical indications and the competitive provision of quality in agricultural markets the economics of geographical indications gis is assessed within a vertical product differentiation framework that is consistent with the competitive structure of agriculture it is assumed that certification costs are needed for gis to serve as collective credible quality certification devices and production of high quality product is endogenously determined we find that gis can support a competitive provision of quality and lead to clear welfare gains although they fall short of delivering the constrained first best the main beneficiaries are consumers producers may also accrue some benefit if production of the high quality products draws on scarce factors that they own copyright 2008 oxford university press

larger crises cost more impact of banking sector instability on output growth we propose a method for calculating the macroeconomic costs of banking crises that controls for the downward impact of recessions on banking activity in contrast to earlier research we estimate the cost of crises based on the size of banking crises the extent of a crisis is measured using banking sector aggregates the results based on our method and data from over 100 banking crises suggest that the size of a crisis matters for economic growth lower credit deposit and money growth during crises cause gdp growth to decline

a model of labeling with horizontal differentiation and cost variability we study optimal disclosure of variety by a multiproduct firm with random costs the prices for labeled varieties are increasing functions of the cost differential and do not reveal which variety is cheaper to produce nondisclosure is most common under moderate uncertainty about costs and not too much idiosyncrasy in valuations and quality asymmetry mandatory disclosure decreases expected welfare when cost variability is large and quality asymmetry is small the cheaper variety tends to be oversupplied undersupplied when disclosure is voluntary mandatory competition among multiproduct firms that source inputs in the same upstream market may not lead to more disclosure

the benefits of lending relationships evidence from small business data this paper empirically examines how ties between a firm and its creditors affect the availability and cost of funds to the firm we analyze data collected in a survey of small firms by the small business administration the primary benefit of building close ties with an institutional creditor is that the availability of financing increases we find smaller effects on the price of credit attempts to widen the circle of relationships by borrowing from multiple lenders increases the price and reduces the availability of credit in sum relationships are valuable and appear to operate more through quantities rather than prices

culture openness and finance abstract differences in culture proxied by differences in religion and language cannot be ignored when examining why investor protection differs across countries we show that a country s principal religion predicts the cross sectional variation in creditor rights better than a country s natural openness to international trade its language its income per capita or the origin of its legal system catholic countries protect the rights of creditors less well than protestant countries a country s natural openness to international trade mitigates the influence of religion on creditor rights culture proxies are also helpful in understanding how investor rights are enforced across countries

collective marketing arrangements for geographically differentiated agricultural products welfare impacts and policy implications this paper examines the incentive of atomistic agricultural producers within a specific geographical region to differentiate and collectively market products we develop a model that allows us to analyze the market and welfare effects of the main types of real world producer organizations using it to derive economic insights regarding the circumstances under which these organizations will evolve and describing implications of the results obtained in the context of an ongoing debate between the european union and united states as the anticipated fixed costs of development and marketing increase and the anticipated size of the market falls it becomes essential to increase the ability of the producer organization to control supply in order to ensure the coverage of fixed costs whenever a collective organization allows a market with a new product to exist that otherwise would not have existed there is an increase in societal welfare counterintuitively stronger property right protection for producer organizations may be welfare enhancing even after a differentiated product has been developed the reason for this somewhat paradoxical result is that legislation aimed at curtailing the market power of producer organizations may induce large technological distortions