mechanism design in large games incentives and privacy abstract we study the design of mechanisms satisfying a novel desideratum privacy this requires the mechanism not reveal much about any agent s type to other agents we propose the notion of jo

dynamic corn supply functions a model with explicit optimization both static and dynamic models have been used to estimate aggregate supply elasticities for annual crops the early studies relied on static singleequation models in a few variables assumed static price expectations e g kohls and paarlberg and produced very small estimates of own price supply elasticities e g 0 07 for corn nerlove 1956 1958a and nerlove and addison showed that agricultural supply models incorporating adaptive price expectations and or dynamic resource adjustment produced larger estimates of supply elasticities for corn and other agricultural commodities additionally they showed that supply elasticities obtained from static models need not be bounded by the short run and long run supply elasticities of

best practices in demand forecasting tests of universalistic contingency and configurational theories abstract the paper focuses on best practices in demand forecasting literature has addressed the best practice concept under three different perspectives according to the universalistic perspective some forecasting practices are universally effective regardless of the context in which companies operate in the contingent perspective the effectiveness of forecasting practices depends on the specific kind of context each company faces a third perspective is the configurational one which asserts that there are synergistic effects among best practices in this work we compare these different perspectives by designing and testing different sets of propositions that underline the aforementioned perspectives analysis is conducted by collecting data of more than 500 companies in different countries via the 4th edition of the global manufacturing research group gmrg iv questionnaire the results demonstrate that each perspective has some empirical support

equilibrium and government commitment abstract how should a government use the power to commit to ensure a desirable equilibrium outcome in this paper i show a misleading aspect of what has become a standard approach to this question and i propose an alternative i show that the complete description of an optimal indeed of any policy scheme requires outlining the consequences of paths that are often neglected the specification of policy along those paths is crucial in determining which schemes implement a unique equilibrium and which ones leave room for multiple equilibria that depend on the expectations of the private sector

reputation in dynamic games abstract we analyze reputation in a game between a large player and a continuum of long lived small players in which state variables affect players payoffs the large player s type is private information we give conditions under which in every nash equilibrium a very patient large player will get almost the largest payoff consistent with the small players choosing a best response in a large finite truncation of the game while our results apply to the time inconsistency problem of optimal government policy we show that for the durable goods monopoly reputation may fail to improve the monopolist s payoff journal of economic literatureclassification numbers c72 c73

does one soros make a difference a theory of currency crises with large and small traders do large investors increase the vulnerability of a country to speculative attacks in the foreign exchange markets to address this issue we build a model of currency crises where a single large investor and a continuum of small investors independently decide whether to attack a currency based on their private information about fundamentals even abstracting from signaling the presence of the large investor does make all other traders more aggressive in their selling relative to the case in which there is no large investors small investors attach the currency when fundamentals are stronger yet the difference can be small or null depending on the relative precision of private information of the small and large investors adding signaling makes the influence of the large trader on small traders behaviour much stronger

agricultural price instability a survey of competing explanations and remedies there are two explanations for agricultural price dynamics one follows cobweb logic and models fluctuations driven by expectation errors but emphasises that these expectations create complex dynamics and possibly chaos the other stems from the rational expectations tradition of dynamics driven by real shocks the empirical evidence tends to support the latter but is not conclusive the rational expectations model generates an optimal dynamic path from which no improvement can be expected from public intervention however if we take account of all the potential market failures in agricultural markets and especially in developing countries this conclusion might require some qualifications although an appropriate policy design for stability has still to be achieved this paper surveys the positive and normative literature on agricultural prices highlighting empirical evidence and identifying remaining unresolved issues

responsiveness of crop yield and acreage to prices and climate we investigate the effect of crop price and climate variables on rainfed corn and soybean yields and acreage in the united states using a large panel dataset for the 1977 2007 period instrumental variables are used to control for endogeneity of prices in yield and acreage regressions while allowing for spatially auto correlated errors we find that an increase in corn price has a statistically significant positive impact on corn yield but the effect of soybean price on soybean yields is not statistically significant the estimated price elasticities of corn yield and acreage are 0 23 and 0 45 respectively of the increase in corn supply caused by an increase in corn price we find that 33 8 is due to price induced yield enhancement and 66 2 is due to price induced acreage expansion we also find that the impact of climate change on corn production ranges from 7 to 41 and on soybean ranges from 8 to 45 depending on the climate change scenarios time horizon and global climate models used to predict climate change we show that the aggregate net impact of omitting price variables is an overestimation of the effect of climate change on corn yield by up to 9 and on soybean yield by up to 15

research note optimal selling in dynamic auctions adaptation versus commitment this paper analyzes optimal selling strategies of a monopolist facing forward looking patient unit demand bidders in a sequential auction market such a seller faces a fundamental choice between two selling regimes adaptive selling that involves learning about remaining demand from early prices and commitment selling that forgoes such learning and makes all selling decisions in the beginning of the game a model of the game between the seller and the bidders is proposed to characterize the optimal regime choice the model implies that the relative profitability of the two regimes depends on the expected gains from trade when the expected gains from trade are low commitment dominates adaptation and vice versa

durable goods theory for real world markets the early 1970s witnessed three major advances in durable goods theory swan 1970 1971 and sieper and swan 1973 on optimal durability coase 1972 on time inconsistency and akerlof 1970 on adverse selection this paper surveys durable goods theory starting with these three contributions where much of the focus is on recent literature and on models that explain real world phenomena in addition to the ideas found in the contributions of swan coase and akerlof topics covered include why producers sometimes practice planned obsolescence the role of adverse selection in new car leasing and reasons for aftermarket monopolization

anonymous markets and monetary trading abstract we study infinite horizon monetary economies characterized by trading frictions that originate from random pairwise meetings and commitment and enforcement limitations we prove that introducing occasional trade in centralized markets opens the door to an informal enforcement scheme that sustains a non monetary efficient allocation all is required is that trading partners be patient and their actions be observable we then present a matching environment in which trade may occur in large markets and yet agents trading paths cross at most once this allows the construction of models in which infinitely lived agents trade in competitive markets where money plays an essential role

durable goods monopolists durable goods monopolists face special problems because the sale of their products creates a secondhand market not controlled by the monopolist to the extent the monopolist is able to rent his product rather than sell it or to make binding promises about his future production such problems are ameliorated given the inability to do the above the monopolist is led to producing goods less durable than those produced by either competitive firms or monopolist returns a reverse averch johnson result that monopolist sellers may invest less in fixed costs including plant modernization and research and development than would the renters is shown it is also shown that even though sellers have less monopoly power than renters and nondurable goods monopolists it is possible that the seller will cause a greater deadweight loss than the other types of monopolies

a field study of sales forecasting accuracy and processes abstract as might be expected surveys show accuracy is the most important criterion in selecting a forecasting strategy this may lead to the expectation that computer based software would be used to aid the forecasting effort however despite the wide availability of forecast software management judgement appears to be the preferred method this leads to the question does management judgement provide the most accurate forecast estimates this paper reports a field study of judgemental sales forecasting over thirteen manufacturing organisations to investigate whether these forecasts are accurate unbiased and efficient and whether better ex ante forecasts could have been developed using a computer based model the study shows that the company forecasts were not uniformly more accurate than a simple un seasonally adjusted naive forecast most of the source of error is due to both inefficiency a serial correlation in the errors and bias in the forecasts these two factors seemed to mask any contribution of contextual information to accuracy the results are also discussed in terms of forecasting objectives the organisations may have other than accuracy

capacity choice counters the coase conjecture the coase conjecture 1972 is the proposition that a durable goods monopolist who sells over time and can quickly reduce prices as sales are made will price at marginal cost subsequent work has shown that in some plausible cases that conjecture does not hold we show that the coase conjecture does not hold in any plausible case in particular we examine that conjecture in a model where there is a vanishingly small cost for production capacity and the seller may augment capacity in every period in the gap case any positive capacity cost ensures that in the limit as the size of the gap and the time between sales periods shrink the monopolist obtains profits identical to those that would prevail when she could commit ex ante to a fixed capacity given a standard condition on demand those profits are at least 29 8 of the full static monopoly optimum

the utility of cash flow forecasts in the management of corporate cash balances abstract this paper considers the stochastic cash balance problem a dynamic simple policy dsp is proposed to minimise transaction costs under a general cost structure when the cash flows are not independently or identically distributed the validity of the approach is demonstrated using the scenario of double exponentially distributed cash flows considered by penttinen a data set from a large multinational is used to demonstrate the practical application of the dsp to provide conditional expectations of future cash flows a time series model is developed to provide forecasts the performance of the dsp on these cash flows achieved a 16 saving in average transaction cost over the penttinen model the saving due to the forecasting model over the assumption that the cash flows exhibit a constant mean is a function of the time series structure of the relevant cash flows for the example data the benefit of using the bespoke forecasting model over the constant mean was only 2

a rational expectations model of agricultural supply this work suggests a dynamic linear rational expectations modeling strategy for using time series observations to study the impact of product prices on agricultural production and land allocation the farmer s decision consists of specifying each period the portion of his land to be devoted to the growing of alternative crops the dynamic element in the farmer s problem comes from the technology a quadratic production technology is used the farmer s optimal land allocation decision rules are derived as linear functions of past land allocations expectations of future product prices and other exogenous variables and they can be interpreted as an optimal crop rotation assuming rational expectations and the exogeneity of prices for a small open economy one obtains closed form linear regression equations representing decision rules and stochastic processes these are then estimated and tested using maximum likelihood methods and aggregate data from the egyptian agriculture

acreage decisions under risk the case of corn and soybeans an acreage supply response model is developed under expected utility maximization the resulting framework is used to specify and estimate a system of risk responsive acreage equations for corn and soybeans in the united states particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices also a wealth variable is included in the acreage equations the empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions the analysis also shows that cross commodity risk reduction is important in acreage allocation decisions

technology and u s corn yields plateaus and price responsiveness corn yields in the united states have increased at a slower rate during the 1970s than in the previous two decades fitting straight lines to aggregate corn yields over the period 1954 80 figure 1 suggests a curvilinear relationship different slopes are obtained by splitting the sample at any one of the years 1969 1970 1971 for the split shown in figure 1 the slope is 2 67 for 1954 70 and 1 34 for 197180 since 1970 events have caused corn yields to drop the 1970 corn blight drought in 1974 and 1980 and drops in nitrogen application rates in 1974 and 1975 whether the slowdown in corn yield increases is temporary permanent or signals a plateauing of u s corn yields is not clear swanson and nyankori to analyze this issue the recent historical data 1954 80 on u s corn yields is examined swanson cautioned against extrapolating past trends into the future without decomposing technology into its components multicollinearity problems dictate a limited decomposition into nitrogen and nonnitrogen components the basis for this distinction is found in microagronomic data a second objective is to check whether developments over the last decade have significantly changed the elasticity of u s corn yields with respect to the fertilizer corn price ratio

the influence of commodity programs on acreage response to market price with an illustration concerning rice policy in the united states farm programs influence the parameters of typically estimated supply functions we develop and apply an approach that uses detailed information about farm program incentives and constraints to identify underlying structural acreage response parameters when the data reflect behavior under complex government commodity programs we illustrate the approach with data on rice acreage response to market price in the united states for u s rice estimates that fail to appropriately incorporate the program rules under which market data were generated are three to four times smaller than the structural parameters that are useful for most policy analysis or projections under alternative policies

dynamic adverse selection and the supply size in this paper we examine the problem of dynamic adverse selection in a stylized market where the quality of goods is a seller s private information while the realized distribution of qualities is public information we obtain that full trade occurs in every dynamic competitive equilibrium moreover we show that if prices can be conditioned on the supply size then a dynamic competitive equilibrium always exists while it fails to exist if prices cannot be conditioned on the supply size and the frequency of exchanges is high enough we conclude that the possibility to condition prices on the supply size allows us to reach efficiency in the limit for exchanges becoming more and more frequent while otherwise the welfare loss due to delays of exchanges remains bounded away from zero

reputation and imperfect information abstract a common observation in the informal literature of economics and elsewhere is that is multistage games players may seek early in the game to acquire a reputation for being tough or benevolent or something else but this phenomenon is not observed in some formal game theoretic analyses of finite games such as selten s finitely repeated chain store game or in the finitely repeated prisoners dilemma we reexamine selten s model adding to it a small amount of imperfect or incomplete information about players payoffs and we find that this addition is sufficient to give rise to the reputation effect that one intuitively expects

the political economy of u s wheat legislation bruce a babcock colin a carter and andrew schmitz both taxpayer subsidies to u s wheat producers and domestic deadweight losses increased as a result of the u s wheat program adopted in 1985 a calculation of the costs and benefits of alternative wheat policies shows that mandatory production controls with no taxpayer expense could have made wheat producers as well off as the adopted policy becker s theory of competition among interest groups and peltzman s theory of the equilibrium amount of regulation are shown to be consistent with the observed policy choice if the list of affected interest groups includes agricultural input suppliers and grain marketing firms i introduction every five years congress drafts new farm legislation dictating the provisions of commodity programs for cotton and the major food and feed grains for the subsequent five years from 1973 through 1985 the primary features of the commodity programs were guaranteed farm prices and government stockholding activities deadweight losses from the programs during this time were minimal market prices were generally higher than the government defended price floors because of a booming export market legislated increases in commodity support prices combined with a severe drop off in the demand for agricultural exports beginning in 1982 increased the economic costs of the commodity programs the u s price floor became the world price for wheat cotton and corn grain stocks accumulated while government payments to u s farmers grew to unprecedented levels most agricultural interest groups in 1984 agreed that an overhaul of agricultural policy was necessary supporters of large levels of production and exports wanted to stimulate the demand for exports by eliminating price floors others felt that the united states should reduce budgetary costs by using direct supply controls to raise farm prices the clear winners in the new 1985 farm bill were the proponents of maintained production levels and expanded exports the new policy froze the relatively high supply prices received by farmers while simultaneously lowering price floors becker 1983 argues that two forces mainly determine the outcome of policy debates the first following stigler 1971 and peltzman 1976 is the relative efficiency with which interest groups exert political pressure interest groups that are efficient in exerting political pressure can increase the subsidization or decrease the tax burden of their constituents the second force is the extent of deadweight losses associated with proposed policies those policies with lower deadweight losses are ceteris paribus more likely to be adopted for the simple reason that less tax needs to be collected from losing interest groups for given transfers to winning groups gardner 1987 finds empirical evidence that both the ability to redistribute efficiently and the effectiveness of political organizations help explain which farm commodities have received the most government support since 1930 his study provides little insight however into which force is more important in determining the type of redistribution policies that are ultimately adopted for a given commodity an examination of the wheat program adopted in the 1985 farm bill and alternative policies that were rejected provides an opportunity to determine whether the efficiency of programs or the political prowess of interest groups is more important in determining policy outcomes this task requires a calculation of the magnitudes and the distribution of costs and benefits of the chosen policy and alternative policies costs and benefits are calculated for 1 a continuation of the 1981 farm bill policies through 1986 1990 2 the adopted 1985 farm bill policies and 3 mandatory production controls all three alternatives are examined relative to a laissez faire policy whereby the u s government has no direct involvement in agriculture

dynamic agricultural supply response under economic transformation a case study of henan china during the dramatic economic transformation in the last few decades food demand in china has expanded due to rapid urbanization dietary change and steady population growth at the same time a decline in available land for agriculture has made grain selfsufficiency a major goal of chinese agriculture policy a considerable challenge the governmenthasimplementedcomprehensivepolicies to encourage domestic agricultural production including eliminating agricultural taxes and providing direct subsidies to farmers it remains unclear whether these policies are effective in stimulating food production there isanurgentneedforknowledgeonagricultural supply response to changes in prices policies and rural infrastructure in china which can guide policy formulation in the process of economic transformation if agriculture is highly responsive policy induced changes in farmers behavior can be effective in increasing production and ensuring long term food security in the country

response to santeramo and searle 2019 abstract in a recent article santeramo and searle 2019 henceforth san sea argued that the linkages between the soy oil and palm oil markets and their land use consequences could negatively affect the climate performance of the us renewable fuel standard rfs and california s low fuel standard to support their arguments san sea estimated the own and cross price elasticities for supplies of soy and palm oils in the us these authors refer to a valid point that induced land use changes may negatively impact emissions savings due to biofuels however their estimated elasticities provide no new insight on this issue in addition their approach findings analysis and conclusion are subject to several deficiencies and limitations these authors provide no new evidence for the link between biofuel production and land use change due to substitution among vegetable oils in what follows we reflect on some important facts and concerns

a disaggregated analysis of corn acreage response in kentucky farmers plant to various crops are vitally important to farm policy decision makers the trend in this area of research is clearly toward more disaggregated acreage supply functions recent studies by whittaker and bancroft and morzuch weaver and helmberger are examples of acreage supply analyses using data on a state by state basis morzuch weaver and helmberger argue that spatial heterogeneity and the opportunity for measuring variables with greater precision might well make disaggregation at least to the state level worth the extra costs of data collection and analysis p 37 the purpose of this paper is to investigate the gain in explanatory power which can accrue to acreage supply functions for corn when data is disaggregated beyond the state level this disaggregation not only allows for greater accuracy in the measurement of variables but also allows the production function to vary by area a disaggregated analysis should be particularly appropriate for states with a wide range in productivity of farm land

risk behavior and rational expectations in the u s broiler market this study examines the empirical implications of extending the rational expectations hypothesis reh to include price uncertainty a general estimation framework that incorporates both the restrictions on structural parameters and the variance covariance terms is developed garch time series processes are used to generate time varying expectations of both the means and the variances of exogenous variables the empirical application is with a quarterly model of the u s broiler industry the results indicate that the rational expectation of price variance is an important determinant of broiler supply a formal test indicates that the restrictions implied by the reh cannot be rejected

loss function assumptions in rational expectations tests on financial analysts earnings forecasts abstract prior research concludes that financial analysts do not process public information efficiently in generating their earnings forecasts the ordinary least squares ols regression based tests used in prior studies assume implicitly that analysts face a quadratic loss function in contrast we argue that analysts likely face a linear loss function and hence try to minimize their absolute forecast errors we conduct and compare rational expectations tests using these two alternative loss functions we reproduce most prior findings of forecast inefficiency with ols regressions but find virtually no evidence of forecast inefficiency with least absolute deviation regressions where we explicitly assume a linear loss function

when are agents negligible the authors examine the following paradox in a dynamic setting equilibria can be radically different in a model with a finite number of agents than in a model with a continuum of agents they present a simple strategic setting in which this paradox is a general phenomenon however the paradox disappears when there is noisy observation of the players actions and the aggregate level of noise does not disappear too rapidly as the number of players increases the authors give several economic examples in which this paradox has recently received attention durable goods monopoly corporate takeovers and time consistency of optimal government policy copyright 1995 by american economic association

how much of commodity price behavior can a rational expectations storage model explain a rational expectations competitive storage model was applied to the u s corn market to assess the aptness of this framework in explaining monthly price behavior in an actual commodity market relative to previous models extensive realism was added to the model in terms of how production activities and storage costs are specified by modeling convenience yield backwardation in prices between crop years did not depend on the unrealistic assumption of zero ending stocks our model generated cash prices that were distributed with positive skewness and kurtosis and mean and variance that increased over the storage season comparable to the persistence and the occasional spikes observed in commodity prices futures prices were generated as conditional expectations of cash prices at contract maturity and the variances of futures prices exhibited realistic time to maturity and seasonal patterns model realizations of cash and futures prices over many years were used to demonstrate the wide variety of price behaviors that could be observed in an efficient market with a similar market structure implying that economic and policy implications drawn from short historical samples of prices could be misleading

the essentiality of money in environments with centralized trade abstract lagos and wright 2005 introduced an influential model of monetary exchange in which trade alternates between centralized and decentralized markets and money is essential a limitation of their model and of the literature that follows is that they do not provide a microfoundation for the process of exchange in the centralized market in this paper we show that how one models exchange in the centralized market matters for the essentiality of money by describing the centralized market as a strategic market game and studying conditions under which money is essential

rice trade liberalization and implications for u s policy the u s government s rice program treats rice as a homogeneous commodity even though rice s two primary subspecies indica and japonica are differentiated commodities in world markets trade liberalization under the uruguay round of gatt is expected to increase demand for japonica more than for indica we develop a u s rice model which treats rice as a differentiated product u s government programs are modeled and trade liberalization scenarios are analyzed under alternative policies compared to the current policy a more flexible u s policy that treats rice as a differentiated commodity could result in both higher farm incomes and lower government expenditures after trade liberalization

the effects of policy expectations on crop supply with an application to base updating we develop a dynamic model to assess the effects of policy expectations on crop supply and illustrate the approach with estimates of the effects of base updating in u s crop programs for corn and soybeans in the corn belt the effect of base updating is relatively small because relevant crop alternatives are subject to similar policies and the alternatives are substitutes in production increasing acreage of one program crop to capture future payments from base updating reduces future payments from the alternative crop we also use our model to assess the effect of base updating on acreage response to prices

a dynamic model of acreage allocation with general and crop specific soil capital we develop an empirically tractable model of acreage allocation decisions in which farmers consider impacts of current crop production 00 future soil productivity because of the soil productivity effects future crop prices are shown to affect current acreage allocations government programs which alter farmers expectations of future crop prices relative to current prices also alter farmers consideration of soil productivity effects of current acreage allocations reduced form and structural versions of our model are shown to yield reasonable parameter estimates

program enrollment and acreage response to reforestation cost sharing programs five alternative sets of predictions are presented of the total acreage of southern pine that would have been planted after clear cut harvest if existing government forest improvement programs had made different levels of cost sharing available to nonindustrial private forest owners the predictions illustrate the importance of separating and accounting for both the number of tracts enrolled and for the size of enrolled tracts predictions are obtained from a profit maximization model that represents the owner s decision as a simultaneous choice of reforestation practice and size of tract to harvest and reforest

durable services monopolists do better than durable goods monopolists the authors consider a monopolist who can commit to a price path when selling a good for which individual consumers demand at most one unit only if the monopolist can also commit to destroying unpurchased stock and the timing of stock release can she earn more than a static monopolist this additional commitment power has empirical revelance for a wide range of goods that the authors term durable services the inability to store output facilitates price discrimination by a durable services monopolist by permitting the credible threat of rationing the authors detail sufficient conditions for a durable services monopolist to produce more than a static or durable goods monopolist produces

testing the rationality of doe s energy price forecasts under asymmetric loss preferences this paper examines the rationality of the price forecasts for energy commodities of the united states department of energy s doe departing from the common assumption in the literature that doe s forecasts are based on a symmetric underlying loss function with respect to positive vs negative forecast errors instead we opt for the methodology of elliott et al 2005 that allows testing the joint hypothesis of an asymmetric loss function and rationality and reveals the underlying preferences of the forecaster results indicate the existence of asymmetries in the shape of the loss function for most energy categories with preferences leaning towards optimism moreover we also examine whether there is a structural break in those preferences over the examined period 1997 2012

cooperation among strangers under the shadow of the future we study the emergence of norms of cooperation in experimental economies populated by strangers interacting indefinitely can these economies achieve full efficiency even without formal enforcement institutions which institutions for monitoring and enforcement facilitate cooperation finally what classes of strategies do subjects employ we find that first cooperation can be sustained even in anonymous settings second some type of monitoring and punishment institutions significantly promote cooperation and third subjects mostly employ strategies that are selective in punishment

worldwide acreage and yield response to international price change and volatility a dynamic panel data analysis for wheat rice corn and soybeans this study estimates a worldwide aggregate supply response for key agricultural commodities namely wheat rice corn and soybeans by employing a newly developed multi country crop and calendar specific seasonally disaggregated model with price changes and price volatility applied accordingly the findings reveal that although higher output prices serve as incentives to improve global crop supply as expected output price volatility acts as a disincentive depending on the crop the results show that own price supply elasticities range from about 0 05 to 0 40 output price volatility however has negative correlations with crop supply implying that farmers shift land other inputs and yield improving investments to crops with less volatile prices simulating the impact of price dynamics since 2006 we find that price risk has reduced the production response of wheat in particular and to a lesser extent rice thus dampening price incentive effects the simulation analysis shows that the increase in own crop price volatility during the 2006 2010 period has dampened yield by about 1 2 for the crops considered

note on adjustments to analysts earnings forecasts based upon systematic cross sectional components of prior period errors this study assesses the effectiveness of using systematic components of cross sectional forecast errors from prior years in order to adjust current analysts earnings forecasts the empirical results document that a significant component of the cross sectional mse in analysts forecasts is systematic and that parameter estimates from earlier periods enable the elimination of a substantial portion of the systematic errors in current forecasts further improvements in forecast accuracy are attained by the incorporation of prior year excess security returns in order to reduce unsystematic error

paying for environmental services an analysis of participation in costa rica s psa program summary costa rica has long been a leader among developing countries in the design of and experimentation with innovative environmental programs since 1997 costa rica s pagos de servicios ambientales payments for environmental services program has provided payments to more than 4 400 farmers and forest owners for reforestation forest conservation and sustainable forest management activities econometric analysis of a survey of farmers and forest owners including both psa participants and nonparticipants shows that farm size human capital and household economic factors and information variables significantly influence participation in psa program alternatives large farmers and forest owners are disproportionately represented among program participants

analytical debiasing of corporate cash flow forecasts abstract we propose and empirically test statistical approaches to debiasing judgmental corporate cash flow forecasts accuracy of cash flow forecasts plays a pivotal role in corporate planning as liquidity and foreign exchange risk management are based on such forecasts surprisingly to our knowledge there is no previous empirical work on the identification statistical correction and interpretation of prediction biases in large enterprise financial forecast data in general and cash flow forecasting in particular employing a unique set of empirical forecasts delivered by 34 legal entities of a multinational corporation over a multi year period we compare different forecast correction techniques such as theil s method and approaches employing robust regression both with various discount factors our findings indicate that rectifiable mean as well as regression biases exist for all business divisions of the company and that statistical correction increases forecast accuracy significantly we show that the parameters estimated by the models for different business divisions can also be related to the characteristics of the business environment and provide valuable insights for corporate financial controllers to better understand quantify and feedback the biases to the forecasters aiming to systematically improve predictive accuracy over time

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

u s farm policy and the volatility of commodity prices and farm revenues a dynamic three commodity rational expectations storage model is used to compare the impact of the federal agricultural improvement and reform fair act of 1996 with a free market policy and with pre fair policies results suggest that fair did not lead to significant increases in long run price volatility or revenue volatility the main impact of pre fair relative to the free market regime was to substitute government storage for private storage in a way that did little to support prices or to stabilize farm incomes results also indicate that u s grain market volatility in 1995 2000 was due to fundamental market forces and not to fair copyright 2002 oxford university press

participation in farm commodity programs a stochastic dominance analysis grube correctly argues that mini max and maximax criteria can help analysts determine the interval in which for a given set of preferences there will be changes in the preferred distribution the criteria is of less value when simulations are used to generate distributions without exact a priori knowledge of the random draw of order statistics we will argue that in most cases one can go even further and solve for the specific break even level of risk aversion this should simplify the procedures commonly used to rank risky prospects the author calculates that for the data presented the mini max critical value is 0 000003 for risk preferrers and 0 000002 for risk avoiders he concludes that these are low values when compared to the range originally considered 0 04 to 0 03 since his numbers fall within our range this suggests that our range could have been narrower than it was but clearly our range did contain the values he calculated it is noteworthy that when the smaller coefficients were used the relative rankings of choices remained unchanged grube concludes that kp s results are correct in the sense that they give a correct ranking of the order in which alternatives would be chosen by decision makers with varying absolute risk aversion coefficients since ultimately risk analysts are interested in the relative ranking of risky prospects this would suggest that our results are more robust than the author implies in his remarks while grube has suggested a means of identifying the interval of interest we would argue that in many cases one could go further and solve for the break even level of risk preference the break even level would be that value at which there is a switching in the dominance of one distribution over another using results developed by hammond it should be possible to simplify both the calculation and presentation of stochastic dominance results by solving for the break even level two conditions must be satisfied in order to apply hammond s results first constant risk aversion must be assumed while the use of utility functions exhibiting decreasing risk aversion has been advocated in the theoretical literature and supported somewhat by empirical studies which have assessed utility functions in most applications constant risk aversion is assumed this is largely because wealth data is frequently unavailable or of questionable accuracy thus risk analysts typically assume that a decision maker s utility function can be approximated over the relevant range by a constant risk aversion function such as the negative exponential function u x 1 e ax

instrumental variables procedures for estimating linear rational expectations models abstract this paper illustrates how to use instrumental variables procedures to estimate the parameters of a linear rational expectations model these procedures are appropriate when disturbances are serially correlated and the instrumental variables are not exogenous we compare our procedures to some alternative estimators that estimate free parameters from restrictions implied by the euler equations the procedures are applicable to a variety of linear rational expectations models several examples of which we cite

responsiveness of rural and urban land uses to land rent determinants in the u s south ricardian and von thunen land rent models are combined into a single land use share model including farm forest and urban land uses the land share model is applied to the southern united states and elasticities are extracted that measure land share response to changes in population income land values prices and costs in counties with different degrees of urbanizationt he study explores the effect of treating either rural or urban land as a residual use while this practice is common in existing land use studies it is found to significantly affect parameter estimates in this county level analysis

estimating supply response in the presence of farm programs previous empirical research on crop supply response has given insufficient attention to the fundamentally different nature of supply response under farm programs versus competitive markets a simple theoretical model is presented which highlights the program participation option in the farmer s acreage allocation decision the model also provides the basis for different expected supply elasticities under free market and farm program regimes for corn and soybeans econometric supply estimation for corn belt states for 1948 80 using a temporally disaggregated approach confirms a greater supply elasticity for corn and a lower supply elasticity for soybeans under acreage restricting feed grain programs

tactical sales forecasting using a very large set of macroeconomic indicators abstract tactical forecasting in supply chain management supports planning for inventory scheduling production and raw material purchase amongst other functions it typically refers to forecasts up to 12 months ahead traditional forecasting models take into account univariate information extrapolating from the past but cannot anticipate macroeconomic events such as steep increases or declines in national economic activity in practice this is countered by using managerial expert judgement which is well known to suffer from various biases is expensive and not scalable this paper evaluates multiple approaches to improve tactical sales forecasting using macro economic leading indicators the proposed statistical forecast selects automatically both the type of leading indicators as well as the order of the lead for each of the selected indicators however as the future values of the leading indicators are unknown an additional uncertainty is introduced this uncertainty is controlled in our methodology by restricting inputs to an unconditional forecasting setup we compare this with the conditional setup where future indicator values are assumed to be known and assess the theoretical loss of forecast accuracy we also evaluate purely statistical model building against judgement aided models where potential leading indicators are pre filtered by experts quantifying the accuracy cost trade off the proposed framework improves on forecasting accuracy over established time series benchmarks while providing useful insights about the key leading indicators we evaluate the proposed approach on a real case study and find 18 8 accuracy gains over the current forecasting process

modeling supply response with implicit revenue functions a policy switching procedure for rice an econometric method of estimating implicit revenue with a policy switching mechanism is proposed for supply response analysis the model develops important linkages between farm program instruments and commodity market equilibrium and allows evaluation of supply response decisions under conditions of major policy shifts the econometric procedure developed here is applied to the u s rice sector to determine program compliance noncompliance decisions under three alternative rice program periods a change in farm prices was found to affect significantly producers net returns and participation rate results indicate price impacts on acreage planted are inelastic for program participants but elastic for nonparticipants

durable goods monopoly with discrete demand we analyze a dynamic game between consumers and the sole seller of a durable good unlike previous analyses we assume that there exists a finite collection of buyers rather than a continuum none of the main conclusions of the literature on durable goods monopoly survives this change in assumption coase s conjecture that a durable goods monopolist cannot earn supracompetitive profits in the continuous time limit bulow s proposition that renting a durable is always more profitable than selling it and stokey s proposition that precommitting to a time path of prices is always optimal are all false when the set of buyers is finite thus the assumption of a continuum of consumers so innocuous and useful a simplification in other contexts has proved misleading in the context of durable goods monopoly

the dynamics of agriculture supply a reconsideration this paper presents a dynamic rational expectations equilibrium model for a given crop the dynamic supply equation is derived from the farmer optimization problem and the equilibrium movements of commodity price production and land allocations are solved analytically it is shown that the observed dynamics of agriculture supply which are usually explained and measured with the nerlovian supply response model can be explained and measured at least as well by the rational expectations equilibrium model however interpretation of the results is different and the paper defines explicitly the dynamic supply elasticities and presents an econometric method for consistent estimators for the parameters

nonlinear price discrimination with a finite number of consumers and constrained recontracting abstract in the monopoly nonlinear pricing problem with unobservable consumer types we study mechanisms in which the firm makes the set of consumer options conditional on the aggregate reports of consumer types it receives previous mechanisms that exploit knowledge of the true type distribution often have multiple equilibria or use noncredible contracts off the equilibrium path when the monopolist can replace contracts after initial reports subject to the constraint that truthful consumers are not made worse off the outcome is essentially the same as when the monopolist has full information this holds whether or not the monopolist can make offers to consumers who reject all original contract offers when the monopolist must guarantee nonnegative surplus to all truthful consumers in all contingencies the equilibrium outcome has undistorted contracts but lower profits for the monopolist

technology as an agricultural pollution control policy in this paper we consider the market level impacts of factor augmenting innovations designed to reduce the use of fertilizers and pesticides first within the context of a simple two factor model and then through a simulation model of the u s corn market in both models the impacts depend on the output demand elasticity and input substitution elasticities the principal conclusion of the simulation analysis is that the potential for new techniques to reduce the use of agricultural chemicals is limited capital augmenting innovations would actually raise fertilizer and pesticide usage land augmenting innovations would also tend to increase pesticide usage

the effect of new price information on crop supply beginning in 1971 initial payments for canadian wheat board grains were announced prior to planting the intention was to influence producer expectations and hence crop supply using a novel estimation procedure designed to conserve degrees of freedom it is concluded that the new information did tend to reduce output variability

uniform and non uniform second best input taxes we investigate second best input based taxes foragricultural nonpoint pollution control when marketprices are endogenous and production isheterogeneous theoretically we derive the optimalforms of taxes which take account of heterogeneity non uniform taxes and a tax which does not auniform tax empirically we use a multi factor market equilibrium simulation model to determineoptimal tax rates and associated equity effects particularly differences in landowner gains lossesacross a heterogeneous region when market prices areendogenous second best tax policies result inpecuniary externalities that affect existingenvironmental externalities in particular thepecuniary externalities amplify the effect of producerheterogeneity on determination of sub regionaldifferences in tax rates and returns to land particularly for the uniform policy with endogenousprices the uniform tax rate is considerably higherthan any of the non uniform rates and ironically thenon uniform taxes result in less dispersion oflandowner gains across sub regions than the uniformtax

durable goods coasian dynamics and uncertainty theory and experiments this paper presents a model in which a durable goods monopolist sells a product to two buyers each buyer is privately informed about his own valuation thus all players are imperfectly informed about market demand we study the monopolist s pricing behavior as players uncertainty regarding demand vanishes in the limit in the limit players are perfectly informed about the downward sloping demand we show that in all games belonging to a fixed and open neighborhood of the limit game there exists a generically unique equilibrium outcome that exhibits coasian dynamics and in which play lasts for at most two periods a laboratory experiment shows that consistent with our theory outcomes in the certain and uncertain demand treatments are the same median opening prices in both treatments are roughly at the level predicted and considerably below the monopoly price consistent with coasian dynamics these prices are lower for higher discount factors demand withholding however leads to more trading period

a multistage model of bargaining this paper presents a simple multistage model of bargaining wherein a seller makes an offer that can be either accepted or refused if rejected the process continues how the seller s ability to make commitments affects bargaining outcomes is analysed by comparing the commitment equilibria to those arising when commitment is impossible the effects of increasing uncertainty about preferences and varying the length of the bargaining horizon are analysed the ways in which the bargaining environment can be changed to improve outcomes are discussed

modeling agricultural supply response using mathematical programming and crop mixes mathematical programming models are widely used in agricultural sector analysis however the lack of micro level data as well as computational requirements necessitate the aggregation of individual producers into representative units when working at the sectoral level this usually leads to unrealistic extreme specialization in supply responses in 1982 mccarl introduced the historical crop mixes approach to avoid extreme specialization we extend this approach by generating additional synthetic crop mixes using supply response elasticities and systematically varied commodity prices in addition to avoiding extreme specialization this approach provides flexibility when future supply responses can be vastly different from past responses an application to u s biofuel policy analysis is presented