product and price competition in a duopoly this paper examines the role of consumer preferences costs and price competition in determining the competitive product strategy of a firm in the model studied here there are two identical firms competing on product quality and price they face consumers who prefer a higher quality product to a lower quality product but differ in how much they are willing to pay for quality the consumers can also choose a substitute if they don t like the product price offerings of the two firms for the firms a higher quality product costs more to produce than a lower quality product the paper shows that the equilibrium strategy for each firm should be to differentiate its product from its competitor with the firm choosing the higher quality choosing the higher margin as well this differentiation however is not efficient that is it is possible to choose two other products and offer them at prices that cover their marginal cost and still satisfy consumers needs better in the aggregate a monopolist by contrast would differentiate his product line efficiently this suggests that cannibalization has different effects on product strategy than competition the paper also shows that if one firm enters the market first then it can defend itself from later entrants and gain a first mover advantage by preempting the most desirable product position

distribution of research gains in multistage production systems research irrespective of the incidence of the levy and benefits no longer is valid we have no disagreement with this important observation but we are concerned about the lack of reliable estimates of the elasticity of substitution building on muth s analysis for which we suggest some changes we explore further the sensitivity of the effects of the distribution of benefits of research to different ways in which research can impact on a multistage production system and to the effects of the elasticities

the impact of integrated aquaculture agriculture on small scale farms in southern malawi sustainable agricultural intensification is an urgent challenge for sub saharan africa one potential solution is to rely on local farmers knowledge for improved management of diverse on farm resources and integration among various farm enterprises in this article we analyze the farm level impact of one recent example namely the integrated aquaculture agriculture iaa technologies that have been developed and disseminated in a participatory manner in malawi based on a 2004 survey of 315 respondents 166 adopters and 149 nonadopters we test the hypothesis that adoption of iaa is associated with improved farm productivity and more efficient use of resources estimating a technical inefficiency function shows that iaa farms were significantly more efficient compared to nonadopters iaa farms also had higher total factor productivity higher farm income per hectare and higher returns to family labor

marginal analysis of welfare costs of environmental policies the case of pesticide regulation we present a methodology for estimating net social welfare costs and their distribution using only information on price quantities elasticities of supply and demand and estimates of cost and or yield effects of policies provided by natural scientists an application to a case of pesticide regulation demonstrates the importance of equity effects simulations show that redistribution of income among producers becomes the dominant effect of pesticide policies when supply elasticities are higher and demand elasticities are lower with changes in supply elasticity having a greater impact than changes in demand elasticity for crops with significant export markets foreign consumers are shown to bear much of the short run cost many cases now exist of legislation and executive orders mandating the use of benefit cost criteria in policy choice to be useful in policy assessments welfare methodologies must meet certain requirements first they must provide estimates of the efficiency impacts of alternative policies measured by changes in net social surplus second estimates of the

remanufacturing as a marketing strategy the profitability of remanufacturing systems for different cost technology and logistics structures has been extensively investigated in the literature we provide an alternative and somewhat complementary approach that considers demand related issues such as the existence of green segments original equipment manufacturer competition and product life cycle effects the profitability of a remanufacturing system strongly depends on these issues as well as on their interactions for a monopolist we show that there exist thresholds on the remanufacturing cost savings the green segment size market growth rate and consumer valuations for the remanufactured products above which remanufacturing is profitable more important we show that under competition remanufacturing can become an effective marketing strategy which allows the manufacturer to defend its market share via price discrimination

distribution of research gains in multistage production systems further results the marketing sector in muth s single stage model is disaggregated in to two sequential stages processing and distribution comparative statics are used to derive necessary and sufficient conditions for farmers to gain from downstream research the farm benefits are shown to depend crucially on the stage in marketing to which research is directed

measuring productivity in economic growth since world war ii the improvement in the material well being of their citizens has been an explicit goal of nearly every nation associated with this goal is the challenge of how to utilize primary resources more efficiently to get more from what goes into the productive process success in this endeavor requires that the economic processes be in continual disequilibrium which gives rise to opportunities that decision makers can use to advan

evaluating the uncertainty in estimates of the economic impacts of bovine leukosis virus in u s dairy cows an examination of the economic impacts of bovine leukosis virus indicated that reduced milk production attributed to the presence of bovine leukosis virus in dairy cows reduced consumer surplus by 2 7 2 3 billion us bus and resulted in a total partial equilibrium loss of 720 560 million us mus to the u s economy in 1996 most of the economic surplus lost by consumers was transferred to producers whose economic surplus increased by 2 0 1 8 bus as a result of reduced milk production attributed to the presence of bovine leukosis virus in dairy cattle uncertainty analysis showed that an estimate of the milk production decline per percent increase in the prevalence of bovine leukosis virus in dairy cows accounted for most of the uncertainty in the economic impact estimates if bovine leukosis virus had not been present in u s dairy cows then milk production would have increased by 2 0 billion 1 5 billion kg the price would have fallen by 3 8 3 2 cents kg and the value of the milk produced would have decreased by 2 1 1 9 bus guidelines delineated by the international organization for standardization for evaluating and expressing uncertainty in measurement are discussed and proposed for use in the context of broad national estimates for which the economic impacts of bovine leukosis virus serve as an example the principal advantages of the methodology are the clarity and transparency of results and the ability clearly to identify major uncertainty contributors

distribution of research gains in multistage production systems comment in a recent paper freebairn davis and edwards hereafter fde have examined an interesting and neglected aspect of the distribution of benefits from research agricultural production is seen to comprise three stages input supply farm production and farm to retail marketing fde have explored the distribution of the benefit stemming from a downwards shift in the supply function at any one of the stages they conclude these benefits are distributed according to the elasticities of consumer demand and supply facing each stage furthermore under the special assumptions they employ this distribution is independent of which of the three supply functions is shifted by research they conclude albeit with due caution that the choice of agricultural research projects should not be limited to farm production research alone especially in view of the cost shares of purchased inputs and marketing services in the retail value of food in fact they argue they farmers may receive greater benefits from off farm oriented research than from farm oriented research p 39 this finding has potentially important implications for agricultural research policy it immediately spurs one to ask whether research funded by the farmer or the fisc might have neglected opportunities for research related to farm inputs or marketing to reach their result fde assume a all supply and demand curves are linear b research induces parallel shifts in supply curves c farmers cannot substitute nonfarm inputs for inputs supplied by farmers in production of the farm product and d marketing firms cannot substitute marketing inputs for raw farm products in the production of retail commodities the purpose of this note is to emphasize the importance of these elasticities of factor substitution in determining the distribution of research benefits between the three stages to do this we use a simple but general two factor model in which we focus attention on the elasticity of factor substitution between marketing services and raw farm products in the third stage marketing this model is not restricted to linear supply and demand curves nor to an elasticity of substitution of zero we maintain the assumptions of parallel shifts of supply curves induced by research and a perfectly elastic supply of marketing services in a revision of fde s application to the u s hog industry the distribution of research benefits is shown to depend crucially on the elasticity of factor substitution their result that such distribution is independent of the stage in which research shifts the supply curve downwards follows only for the special case in which that elasticity is zero this is clearly a restrictive assumption a reexamination of some of the policy issues raised by fde once the assumption is relaxed would seem to be warranted

safety and quality regulation 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

evaluating returns to agricultural research a review this paper reviews and compares the most common approaches used to evaluate public agricultural research investment ex post studies fall into two major groups a consumer and producer surplus analyses estimating average rates of return to research and b production function analyses estimating marginal rates of return to research ex ante studies fall into four groups a those using scoring models to rank research activities b those employing benefit cost analysis to establish rates of return to research c those using simulation models and d those using mathematical programming to select an optimal mix of research activities

us dairy policy alternatives under bovine somatotropin a dynamic optimal control model is constructed to study us dairy policy alternatives under bovine somatotropin bst the results indicate that the adoption of bst might be slower than that indicated by the early surveys even if adoption is widespread the government can have the potentially large milk surplus problems under control with a combination of price support generic milk advertising and a cow buy out with bst adoption the government would set lower support prices and would increase assesment for milk advertising compared with the no bst case the higher adoption rates the lower the support prices and the higher the advertising assesments it is found that bst adoption is socially beneficial consumers gain at the expense of producers the government can however help produces by giving a larger policy weight to producers in setting the optimal levels of policy variables finally it is found that the current levels of generic advertising are too low and the allocation of advertising bet

the effects of supply shifts on producers surplus changes in the supply curve caused by technological improvements in production or changes in national policy may or may not benefit producers as a whole depending on the type of shift in the supply curve a structured analysis of different changes in the supply curve that model this situation is given and the change in producers surplus is examined depending on quantitative aspects of the supply and demand curves for supply and demand curves that are linear or power functions a small downward pivot of the supply curve will increase producers surplus only if the equilibrium point is far enough into the elastic region of the demand curve and any downward pivot of the supply curve will decrease producers surplus if the equilibrium point is in the inelastic region of the demand curve similar results are obtained for the more general case of convex supply and demand curves

returns to public irrigation development recently returns to public investment in general and irrigation investment in particular have received critical attention from economists young martin two of the important interrelated issues are a how to measure beneficial impacts of irrigation projects and b who should pay for this public investment once we know the magnitude of benefits created and the beneficiaries we should be able to recommend who should pay for this investment and how much they should pay for simplicity we classify the beneficiaries of public irrigation into two major groups producers and consumers most studies freeman keleta u s water resources council u s department of the interior and references cited in young young and gray and martin on returns to irrigation emphasize production gains from irrigation the gains enjoyed by consumers are typically omitted the exception being martin s work the implicit assumption here is that the relevant commodity demand curves are perfectly elastic as martin argues this assumption may be valid for a particular project but not for the general equilibrium context taking into account all the projects undertaken in a period thus the proper demand curve to use is not perfectly elastic but downward sloping for a valid evaluation of benefits of public irrigation one should account for both consumer and producer surpluses doing that will provide us with objective criteria concerning who should pay how much for irrigation investment thus the specific objectives here are a to derive analytical expressions for measuring consumer and producer surpluses when public irrigation investment shifts the supply function for commodities and b to derive expressions for the exact distribution of gains between consumers and producers i consumers and producers surpluses with irrigation

consumer s surplus versus compensating variation revisited consumer s surplus and a second order approximation to compensating variation are compared to the exact compensating variation for a subsystem of several commodities an empirical application to the relative retail price distortions created by the u s dairy program is presented in the application a new specification for weakly integrable incomplete demand models is developed and estimated the integrable demand model has sufficient flexibility that it is not rejected by the data both welfare approximations are found to introduce large errors in the measurement of deadweight losses

dynamic and stochastic behavior of coefficient of demand uncertainty incorporated with eoq variables an application in finished goods inventory from general motors dealerships abstract the objective of this paper is to investigate finished goods inventory in the u s automobile industry using an econometric method known as the variable mean response vmr estimation the research uses the classical economic order quantity eoq model as a starting point different from the usual form of the model here we relax certain assumptions inherent to the eoq and treat demand as uncertain rather than deterministic in this research eight models are developed and applied empirically the results of the proposed models and methodology provide inventory decision makers with different managerial implications and strategic improvements overall the empirical results demonstrate many avenues for considering new inventory policies

measuring research benefits in an imperfect market in this paper an imperfect market model is developed for evaluating agricultural research benefits the main finding is that the increases in societal gain and the producer s share of this gain are larger with a monopoly than with a competitive market the paper argues that if the market for an agricultural input or for a commodity is not competitive then use of a competitive model for assessing research benefits could lead to understatements of both producer and total benefits

ex ante evaluation of the economic impact of agricultural biotechnology the case of porcine somatotropin advances in biotechnology are leading to the creation of products which are expected to have a significant impact on agricultural production much discussion in the literature has focused on possible impacts of biotechnology on agriculture kalter and tauer hueth and just stallman and schmid but few quantitative estimates of the probable impact exist this paper examines the impact of a new growth hormone porcine somatotropin pst on the u s pork industry our approach is generally useful for ex ante analyses of new biotechnologies where experimental estimates of the impact of the technology are available and where the nature of the commodity produced may be affected by the new biotechnology pst is a naturally occurring somatotropin protein produced in the pig s pituitary supplemental pst has been shown in experimental research to lead to improvement in average daily gain improvement in feed efficiency and change in carcass composition of the pig by converting fat to lean meat the purpose of this paper is to simulate the likely impact of supplemental pst use on prices and quantities of pork at the retail and farm levels and on net benefits of producers and consumers the approach taken here to quantifying the impact of pst is in the spirit of previous ex ante approaches to estimating returns to agricultural research norton and davis this study explicitly takes into account a interrelationships between the domestic hog and pork markets b interrelationships between pork and other meats c interrelationships between the domestic and international mar

an empirical analysis of the role of the medium of exchange in mergers in empirical studies of differences between firms which are acquired and those which are not researchers typically divide firms into two groups acquired and nonacquired in this paper we argue that cash takeovers may be sufficiently different from noncash acquisitions that failure to distinguish between them may lead to inappropriate generalizations we provide evidence from the mid 1970s that three categories of firms can be distinguished nonacquired acquired in a cash takeover and acquired in an exchange of securities there is a substantial empirical literature exploring the differences between firms which are acquired and those which are not typically these studies divide firms into two groups acquired and nonacquired and analyze the differences in the characteristics of the two groups using binary dependent variable techniques such as discriminant analysis or probit analysis a fundamental shortcoming of these studies is that no distinctions are made concerning the nature of the merger or the acquiring firm that is it is assumed that acquired firms fall into a single category that is distinguishable from nonacquired firms in fact individual acquisitions may be motivated by quite different features suggesting that more than a single category of acquired firms should be analyzed in this paper we argue that cash takeovers may be sufficiently different from noncash acquisitions that modeling the events as being the same i e just mergers may be inappropriate we then provide evidence using data for the mid 1970s that three types of firms can be distinguished nonacquired acquired in a cash takeover and acquired in an exchange of securities the paper is organized as follows in the next section we suggest why firms acquired for cash may be quite different from firms acquired by an exchange of securities section ii describes the empirical techniques which are used and

distributional welfare implications of an irrigation water subsidy the distributional welfare implications of a subsidy for irrigation water for california rice producers are analyzed a more general equilibrium approach than that used in previous studies is taken in order to determine the effects of subsidy on consumers subsidized producers and unsubsidized producers the two important policy conclusions of the results are that unsubsidized producers bear part of the cost of a subsidy through lower prices and that consumers taxpayers may gain by sponsoring increased production through a selective subsidy

kenyan dairy policy change influence pathways and economic impacts summary marketing transporting processing and consuming dairy products contribute significantly to the livelihoods of many poor kenyan households this study analyzes the impact of recent research supporting policy changes to liberalize informal milk markets the study found that behavioral changes in dairy sector participants arising from the research evidence supported policy and regulatory changes led to an average 9 reduction in milk marketing margins and a significant increase in the number of licensed small scale milk vendors high welfare benefits arising from the policy change with a net present value of us 230 million are captured by consumers producers and milk vendors

the farm retail price spread in an imperfectly competitive food industry in a previous article in this journal gardner investigated the effects of three distinct forces affecting food system equilibria shifts in retail demand shifts in farm commodity supply and shifts in marketing input supply he derived comparative static predictions about how the quotient of retail and farm prices the retailfarm price ratio would adjust to changes in each of these exogenous effects the investigation was conducted within a framework that

economic returns to cowpea research extension and input distribution in senegal abstract this paper calculates the rate of return to a set of cowpea research extension and distribution projects in senegal to be between 31 and 92 the results show that a modestly funded program on a secondary crop can be successful they also indicate that programs may increase their effectiveness by addressing specific household needs in this case by focusing on short cycle varieties that provide food during the hunger season prior to the traditional harvest

productivity in u s food processing and distribution most productivity studies in agriculture have focused on the relation between farm inputs and farm output of equal importance however is productivity in the food processing and distribution sector farm output is an input into this process similar to other inputs such as labor transportation and packaging technical change or increases in the levels of other inputs will in general increase the marginal product of farm output freebairn davis edwards for example a new beef cutting machine will raise the marginal value product of beef and hence increase the demand for slaughter beef by processors for this and other reasons the efficiency of the marketing sector has long been of interest french the purpose of this paper is to define and measure productivity at the processing and distribution level by comparing theil tdrnqvist tat indexes of inputs and outputs the use of tat indexes is consistent with the assumption of reasonably general underlying production relations and follows the recommendations of the recent

distribution of gains from research and promotion in multi stage production systems the case of the u s beef and pork industries a producer financed program that leads to either an increase in retail demand from promotion or a decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research the distribution of gains depends on the degree of substitutibility between farm and nonfarm inputs comparative statics of equal absolute changes in demand supply and marketing costs in the u s beef and pork industries show the significance of input substitutibility for distribution of gains and sensitivity of the results to beef and pork demand interrelationships

regulation in a dynamic market the u s dairy industry an econometric model of the u s dairy market is estimated for the period 1950 80 the economic costs of the dairy program for the period 1965 80 are calculated using ex ante ex post and long run demand and supply functions results indicate that the costs of the dairy program averaged from 430 to 590 million 1980dollars per year depending upon the choice of economic surplus measure the cost estimates depend only slightly on the year that the dairy program is assumed to have been terminated

the calculation of research benefits with linear and non linear specifications of the demand and supply reply this paper provides a comparison of research benefits for linear and nonlinear constant elasticity nlce specifications of supply and demand with a pivotal supply shift framework the comparison allows for a sensitivity test of results to different values for demand and supply elasticity the main finding is that the values of the gross annual research benefits calculated for the nlce specification are larger than those calculated for the linear specification with price elastic supply but are smaller with price inelastic supply the analysis suggests that the use of an nlce specification and a pivotal shift due to research is usually preferable to use of a linear supply curve with pivotal shift

the construction of tender offers capital gains taxes and the free rider problem shareholders are less likely to tender shares in the first stage of a two tier offer than in an any or all offer this is inconsistent with the view that two tier offers overcome the free rider problem this article shows that two tier offers with a fully taxable first stage and a nontaxable second stage are structured to induce shareholders with low capital gains tax liabilities to accept the first stage and shareholders with high capital gains tax liabilities to accept the second stage in offers where both the first and second stage compensations are taxable high tendering rates occur in the first stage copyright 1988 by the university of chicago

the effect of poison pill securities on shareholder wealth abstract this paper examines empirical evidence about the effect of poison pill takeover defenses on shareholder wealth i find evidence that announcements of the most restrictive forms of the pill defense are associated with stock price declines also the most restrictive forms of the pill defense are associated with abnormally high rates of defeat of unsolicited tender offers although this evidence is consistent with managerial entrenchment the evidence implies that on average poison pill defenses have seemingly had only a modest effect on firm valuation

relicensing as a secondary market strategy secondary markets in the information technology industry where used or refurbished equipment is traded have been growing steadily for original equipment manufacturers oems in this industry the importance of secondary markets has grown in parallel not only as a source of revenue but also because of their impact on these firms competitive advantage and market strategy recent articles in the press have severely criticized some oems who are perceived to be actively trying to eliminate the secondary market for their products other oems have policies that enhance their secondary markets the goal of this paper is to understand how an oem s incentives and optimal strategies vis a vis the secondary market are shaped contingent on her relative competitive advantage product characteristics and consumer preferences the critical trade off that we examine is whether the indirect benefit from maintaining an active secondary market the resale value effect can outweigh the potentially negative effect of the sales of used products at the expense of new product sales the cannibalization effect to that end we develop a durable good model where the oem can directly affect the resale value of her product through a relicensing fee charged to the buyer of the refurbished equipment we analyze the oem s strategy in both the monopoly and the duopoly cases characterize the optimal relicensing fee set by the oem and draw conclusions on the conditions that favor stimulating or deterring the secondary market this paper was accepted by candace a yano operations and supply chain management

optimal stock trading with personal taxes implications for prices and the abnormal january returns abstract the tax law confers upon the investor a timing option to realize capital losses and defer capital gains with the tax rate on long term gains and losses being about half the short term rate the law provides a second timing option to realize losses short term and gains long term if at all our theory and simulation over the 1962 1977 period establish that taxable investors should realize long term gains in high variance stocks and repurchase stock in order to realize potential future losses short term tax trading does not explain the small firm anomaly but predicts a seasonal pattern in trading volume which maps into a seasonal pattern in stock prices the january anomaly only if investors are irrational or ignorant of the price seasonality

tracing the evolution of the aggregate u s milk supply elasticity using a herd dynamics model the u s dairy sector is characterized by increasing volatility of milk prices and consolidation in production as evidenced by declining number of dairy farms with an increasingly larger share of milk supplied from a small number of very large farms using aggregate national data we build a mixed frequency herd dynamics econometric model of the u s milk supply that updates and substantially amends the model first proposed by chavas and klemme we implement a dynamic residual based bootstrap technique that can be used in testing for changes in nonmarginal simulated long run supply responsiveness and trace the evolution of long run milk supply elasticity from 1975 through 2010 several papers in the past have suggested that long run supply elasticity increases with dairy farm size which implies that increased importance of large farms would increase aggregate long run supply responsiveness contrary to this conclusion we find a declining trend in long run supply elasticity from 1975 through 2005 persistence of such a decline would be a major cause for worry as ever larger price swings would be needed to equilibrate the market in face of demand shocks however we find that milk supply is becoming more responsive since 2005 both to milk and feed price changes increasing responsiveness to feed prices further justifies focusing the next generation of the dairy policy instruments on managing dairy profit margins rather than just revenue streams

homogeneity and supply supply functions in the ubiquitous gorman class are examined for their homogeneity properties homogeneity places surprisingly strong restrictions on functional forms these forms facilitate testing of aggregability given homogeneity or homogeneity given aggregability or testing both

an interregional analysis of price discrimination and domestic policy reform in the u s dairy sector the u s dairy sector has experienced several reforms in both government price support and classified pricing under state and federal milk marketing orders an interregional spatial market equilibrium model of the u s dairy sector is used to provide quantitative measures of the aggregate and regional impacts of alternative domestic deregulation scenarios the model simulates the allocation of farm milk used in the production of nine dairy products in a way consistent with milk component balances for milk fat protein and carbohydrate both within and across regions results suggest current policies induce substantive aggregate and regional distortions relative to an unregulated policy

resource use and technological progress in agriculture a dynamic general equilibrium analysis we analyze the global effects of economic and population growth and the impact of a slowdown in agricultural total factor productivity tfp on agriculture and forest resources using a dynamic multi region computable general equilibrium model with land use and cover detail given the current consensus about the growth of the world economy our results suggest that food security will not be threatened and agricultural activities will not encroach on forest resources over the next decade a slowdown in agricultural tfp growth might lead to higher crop prices in all regions with south east asia facing the steepest increases a slowdown in agricultural tfp growth also might be accompanied by higher conversion rates of forestland to farmland as well as by greater environmental or ecological damages on the remaining forestland

input substitution and the distribution of surplus gains from lower u s beef processing costs the impact on consumers and input suppliers of allowing substitution between farm and nonfarm inputs in food processing is a controversial issue freebairn davis and edwards 1982 assumed that no substitution between these inputs was possible and concluded that the distribution of surplus gains between producers and consumers is independent of the source of supply shift alston and scobie pointed out that this conclusion depends on the assumption of no input substitution once input substitution is possible farmers can no longer be indifferent about the supply shift since their share of total surplus gains is greater for shifts in farm supply than for marketing input supply furthermore as the degree of input substitution increases the farmers share of surplus gains from a downward shift in the supply of marketing inputs decreases freebairn davis and edwards 1983 replied that while we tend to agree with alston and scobie that the elasticity of substitution in the case of pork is likely to be nonzero we doubt that it is very large and at this stage no satisfactory estimate is available p 357 in this study we obtain a lower bound estimate of the elasticity of substitution and show

welfare and distribution effects of water pricing policies in this paper distribution and welfare effects of changes in block price systems are evaluated a method is discussed to determine for a marshallian demand function equivalent variation in case of a block price system the method is applied to compare for the metropolitan region of sao paulo alternative pricing policies on the basis of their demand welfare and distribution effects of changing water prices results show that there is a trade off between average welfare and income distribution a pro poor price system may result in lower average welfare than a flat price system but in higher individual welfare for the poor moreover there is a trade off between revenues for the water company and income distribution even though pro poor price systems may not be as good for average welfare as flat price systems their direct effects on poverty are important introducing pro poor price systems however may have financial consequences for the water companies

an analysis of 1980s dairy programs and some policy implications excessive government purchases of dairy surpluses during the early 1980s prompted three corrective measures the milk diversion program dairy termination program and lower support prices an eight equation econometric model of the dairy sector simulates these programs and shows them to be incomplete or impermanent in their effects however further analysis shows that a more aggressive policy of lower support prices would be effective in reducing costs to government and consumers and lowering transfers to producers

the determinants of tendering rates in interfirm and self tender offers the authors estimate the determinants of shareholder heterogeneity by examining the shareholder responses to fixed price self tender offers and two tier interfirm tender offers tendering rates are increased in the cash price relative to the postoffer price of the stock proxies for capital gains tax liabilities also explain tendering rates controlling for the cash tender relative to the postoffer price of the stock the authors find that tendering rates are significantly higher in interfirm tender offers than in self tender offers which indicates that shareholders view accepting another firm s stock as an unattractive means of avoiding capital gains copyright 1992 by university of chicago press

research payoffs from quality improvement the case of protein in australian wheat a model is developed for evaluating the size and distribution of the economic benefits from research that improves the quality of an export commodity quality improvement achieved by research or by agronomic practices shifts the domestic and or excess demand curves for an export commodity research costs are not modeled but any shift in the supply curve due to a change in yield for example accompanying the quality improvement is included the model is used to estimate the gains from research that increases protein content in australian wheat it is estimated that australia has the potential to obtain net benefits up to a 53 million per year from a one percentage point increase in the protein content in wheat over 90 of these gains accrue to wheat producers

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

the optimal export tax for a primary commodity in a vertical market the conventional formula for the optimal export tax derived from a partial equilibrium model that ignores importers welfare is extended to include the deadweight loss to the domestic economy associated with the tax applying the extended formula to the tax russia imposes on its exports of logs results suggest ignoring the marketing channel causes the optimal export tax for a primary commodity to be understated the degree of understatement increases as the supply of logs and processing marketing inputs become less price elastic and as buyer and seller power in the downstream lumber industry increases for plausible values of model parameters however the degree of understatement is modest less than 19

on the robustness of the consumer homogeneity assumption with respect to the discount factor for remanufactured products abstract the strategic closed loop supply chain clsc literature makes the assumption that a consumer s willingness to pay wtp for a remanufactured product is a fraction of his her wtp for the corresponding new product and this fraction called discount factor is assumed to be constant among consumers recent empirical research challenges this assumption by showing that there is considerable variability in discount factors among consumers this paper considers a complex model in the clsc literature strategic remanufacturing under quality choice and compares its solution under constant discount factors with the solution that assumes a probability distribution for the discount factors which is analytically intractable and must be obtained numerically we consider quality choice and remanufacturing for both monopoly and competitive cases overall we find remarkable consistency between the results of the constant and variable discount factor models thus we make a convincing argument that the constant discount factor assumption is robust and can be used due to its tractability

functional forms exogenous shifts and economic surplus changes conditions for exact welfare measures in equilibrium displacement modeling are examined these relate to the functional form of supply and demand the nature of the exogenous shift and the definition of percentage changes approximation errors when these conditions are not met in empirical applications are investigated and analytical expressions for the errors derived significant errors are possible when a proportional shift is assumed the assumptions underlying alston and wohlgenant s empirical findings are identified the restriction that supply must be elastic is shown to be unnecessary

the mode of acquisition in takeovers taxes and asymmetric information we develop a model in which the mode of acquisition conveys information concerning the value of the bidder the model incorporates the possibility that offers containing both cash and stock can be made in a setting consistent with the u s tax code we demonstrate that bidders with unfavorable private information about their equity value choose offers containing some stock to avoid the capital gains tax consequences of cash offers the model yields a number of unique predictions about the construction of acquisition offers we present evidence consistent with the model when one firm acquires another it can pay for the acquisition with cash stock or a combination of the two recent studies find that announcement returns to bidding firms who make cash offers are higher than when stock offers are made models consistent with this evidence note that as in myers and majluf 1984 a bidder with private information about the value of its assets only offers stock when its shares are overvalued by target shareholders recognizing this adverse selection target shareholders reduce their estimate of the bidder s value thus without some benefit in stock over cash as a means of payment a lemons problem arises for stock offers and bidders only choose cash offers our paper advances the use of stock in an offer through its tax advantages in the united states to realize the benefits available in nontaxable offers an offer must contain at least fifty percent stock thus when the bidder has private information about the value of its assets stock off6rs can still occur because of their tax advantage the intuition is as follows target holders can postpone the realization of capital gains when they receive stock in a takeover so other things equal they demand higher prices in cash takeovers while the offer of stock may have tax advantages the shares swapped are valued by the target as if they were offered by the average bidder making a stock offer thus a pool of higher private valuation bidder types choose cash offers in spite of the tax consequences a pool of lower private valuation types

managing new and remanufactured products we study a firm that makes new products in the first period and uses returned cores to offer remanufactured products along with new products in future periods we introduce the monopoly environment in two period and multiperiod scenarios to identify thresholds in remanufacturing operations next we focus our attention on the duopoly environment where an independent operator io may intercept cores of products made by the original equipment manufacturer oem to sell remanufactured products in future periods we characterize the production quantities associated with self selection and explore the effect of various parameters in the nash equilibrium among other results we find that if remanufacturing is very profitable the original equipment manufacturer may forgo some of the first period margin by lowering the price and selling additional units to increase the number of cores available for remanufacturing in future periods further as the threat of competition increases the oem is more likely to completely utilize all available cores offering the remanufactured products at a lower price

a dual approach to evaluating research benefits in the presence of trade distortions we present a new approach for evaluating the welfare consequences of technical change a major feature is its ability to incorporate multiple distortions and multiple sources of technical change in interrelated markets a modified balance of trade function provides money measures of welfare change in terms of producer profits consumer expenditures and tax revenues alternative specifications of technical change are presented to capture the effects of differences in the form of technical change in an illustrative numerical example the approach is applied to a case involving two distortions and technical changes in two related markets the example shows that the approach is reasonably easy to use and that accounting correctly for price distortions can have important implications for research benefit measures

genetic improvements in major us crops the size and distribution of benefits the distribution of welfare gains of genetic improvements in major us crops is estimated using a world agricultural trade model multi market welfare estimates were 75 larger than estimates based on the price exogenous change in revenue method frequently used by plant breeders annual benefits of these genetic improvements range from us 400 600 million depending on the supply shift specification of this 44 60 accrues to the us 24 34 accrues to other developed countries developing and transitional economies capture 16 22 of the welfare gain the global benefits of a one time permanent increase in us yields are us 8 1 billion discounted at 10 and us 15 4 billion discounted at 5 gains to consumers in developing and transitional economies range from us 6 1 billion 10 discount rate to us 11 6 billion 5 discount rate

the distribution of benefits from technical change among classes of consumers and producers an ex anteanalysis of beans in brazil abstract because new agricultural technology in developing countries has sometimes bypassed small farmers who are an important social group in low income countries design of technology specifically appropriate to small farmers has been advocated as a policy goal this paper appraises the comparative returns to investment in small farm biased scale neutral and large farm biased technology for bean production in brazil a consumer surplus model is developed to estimate the distribution of benefits among producing sectors and classes of consumers while previous studies have relied on geometrical approximations to measure economic benefits as the area under the supply shifts here an exact analytic solution is obtained by integrating from the supply axis scale neutral technology leads to significant small farmer benefits while maximizing benefits to consumers large farm biased technology results in less benefits to small farmers and consumers and only minor gains to large farmers when compared to scale neutral technology small farm biased technology produces the greatest gains to small farmers but the lowest level of benefits to consumers

urban cassava markets the impact of fresh root storage abstract the authors explain how although fresh cassava is important in rural nutrition its importance in urban areas is limited and declining in colombia the third most important cassava producing country in latin america both the structure of the marketing channel and consumer preferences are considered in explaining this difference the principal factor limiting urban market volume and demand is identified as the rapid root post harvest deterioration which necessitates high margins to cover marketing risks appropriate storage techniques which overcome this problem are evaluated and their possible positive impact through reduction of marketing margins on retail and farmgate prices and on urban consumption is estimated a strategy for storage technology adoption is discussed

capacity acquisition subcontracting and lot sizing the fundamental question encountered in acquiring capacity to meet nonstationary demand over a multiperiod horizon is how to balance the trade off between having insufficient capacity in some periods and excess capacity in others in the former situation part of the demand is subcontracted while in the latter capacity that has been paid for is rendered idle capacity and subcontracting decisions arise in many economic activities ranging from production capacity planning in semiconductor fabs to leasing communication networks from transportation contracts to staffing of call centers in this paper we investigate the trade offs between acquiring capacity subcontracting production and holding inventory to satisfy nonstationary demand over a finite horizon we present capacity acquisition models with holding and without holding inventory and identify forecast robust properties of the models that restrict the dependence of optimal capacity decisions on the demand forecasts we develop algorithms for numerous practical cost structures involving variable and fixed charges and prove that they all have polynomial time complexity for models with inventory we solve a sequence of constant capacity lot sizing and subcontracting subproblems which is also of independent interest