does trading non timber forest products drive specialisation in products gathered for consumption evidence from the brazilian amazon abstract diversification is a hallmark of family based rural production but what happens when autarkic rural communities integrate into markets economic theory predicts that households will maintain diversified strategies when faced with risk however many studies have claimed that openness to markets drives specialisation to enhance returns nevertheless there is little evidence about the association between trade in non timber forest products ntfps and the diversity of ntfps consumed relying on a household survey and systematic observations of brazilian amazonian caboclos we evaluated whether exposure to ntfp markets effort and cash income correlates with the diversity of ntfps consumed richness and simpson diversity the results were conflicting first there was variation across ntfp subtypes although the variety richness of terrestrial ntfps consumed vegetables and hunted animals was greater in households trading ntfps the richness of fish consumed was lower because fishing could not be pursued concurrently with activities related to ntfp trade second the observed effects differed across indicators of diversity which shows that intensification in the use of a few resources may occur third the associations with alternative definitions of exposure to the ntfp market also differed these results indicate that ntfp markets do not necessarily undermine local consumption diversity

premia for correlated default risk abstract using data on corporate default experience in the u s and market rates of cdx index and tranche swaps of various maturities we estimate reduced form models of correlated default timing in the cdx high yield and investment grade portfolios under actual and risk neutral probabilities the striking contrast between the estimated processes followed by the actual and risk neutral arrival intensities of defaults and between the parameters governing the actual and risk neutral dynamics of the risk neutral intensities indicates the presence of substantial default risk premia in cdx swap market rates the effects of risk premia on swap rates covary strongly across maturities and depend on general stock market volatility and several measures of credit spreads large moves in the effects of these premia on swap rates have natural interpretations in terms of economic and financial market developments during the sample period april 2004 to october 2007 our results suggest that a large portion of the movements in cdx swap market rates observed during the sample period may be caused by changing attitudes toward correlated default risk rather than changes in the economic factors affecting the actual risk of clustered defaults which ultimately governs swap payoffs

structural change capital investment and productivity in the food processing industry investment in new technology affects structural change and economic performance through its effect on capital and input composition this is particularly important for capital intensive industries such as food processing which lack short run flexibility due to adjustment costs this study considers the impacts of capital quasi fixity on capital and noncapital input decisions made in the u s food and kindred products industry from 1965 to 1991 a cost based production theory model is used to evaluate investment motivations for three capital components productivity growth accompanying changing input patterns is then discussed focusing on capital and farm input demand

committed procurement in privately negotiated markets evidence from laboratory markets previous research suggests an increase in committed procurement can result in lower cash market prices for livestock there is a paucity of research that ascertains prices received by market agents trading in a prior bargaining session via alternative marketing arrangements versus those who have not we use laboratory market experiments to analyze the potential impacts of committed procurement on privately negotiated transactions when some traders have two windows of negotiation and others have one results illustrate that those who do not engage in prior trading are at a bargaining disadvantage due to matching and inventory loss risks

investment under uncertainty with price ceilings in oligopolies abstract we study the impact of price cap regulation on the level and timing of investment in an oligopolistic cournot industry facing stochastic demand we find that a price ceiling affects investment decisions in two mutually competing ways it makes the option to defer investment more valuable but at the same time it reduces the incentive for firms to strategically underinvest in order to raise prices we show that while sensible price cap regulation speeds up investment a low price cap can be a disincentive for investment there exists an optimal price cap independent of market concentration the competitive investment price trigger that maximizes investment incentives and in the long term increases industry installed capacity this optimal price cap becomes less effective and less robust as the market becomes more competitive and as demand volatility increases errors in estimation of the optimal price cap have asymmetric effects underestimation has more dire consequences than overestimation

dynamic efficiency estimation the shadow cost approach is developed in the context of the dynamic duality model of intertemporal decision making to formulate theoretical and econometric models of dynamic efficiency the dynamic efficiency model is applied to a panel of 72 u s major investor owned electric utilities using fossil fuel fired steam electric power generation over the period 1986 1999 the major results show that most electric utilities underutilized fuel relative to the aggregated labor and the maintenance input and overutilized capital in production states adopting a deregulation plan improve the performance of utilities in terms of the technical efficiency of variable inputs

market regulation and multimarket rivalry multimarket contact between duopolists in an x and y market is modelled with a trigger strategy we show that mildly restrictive price cap regulation in the x market decreases y market quantities but restrictive caps in the x market have a positive impact on y market outputs behavior in laboratory markets confirms these propositions regulation that lowers x market prices by a small amount results in a statistically significant reduction in y outputs when the regulated x market price is reduced to the cournot nash level y market outputs rise to a point statistically indistinguishable from the unregulated quantities

specialization diversification and productivity a panel data analysis of rice farms in korea this article examines the microeconomics of productivity associated with specialization diversification in production activities with an application to korean rice farms korean rice farms tend to be very small and highly specialized our analysis examines the productivity effects associated with both farm size and farm specialization diversification in korean agriculture relying on farm level panel data the analysis studies farm productivity in a multi input multi output context accounting not only for changes in inputs and technical change in rice production but also for the role of diversification in the production of other crops in current and previous periods we find positive but small productivity gains from farm diversification these gains come mostly from complementarity effects across farm outputs with minimal effect of scale economies the positive complementarity effects work against nonconvexity effects which provide strong productivity incentives for rice farms to specialize

trade costs and multimarket collusion contrary to conventional wisdom this article argues that trade liberalization may facilitate collusion and reduce welfare with the help of a duopoly model in which firms interact repeatedly in multiple markets we first show that if trade costs i e tariffs transport costs and discount factors are not too high efficient cartel agreements necessitate the cross hauling of goods as that entails lower deviation incentives in this setting we then demonstrate that reciprocal trade liberalization always raises total output when trade costs are within a range whose lower bound exceeds a threshold level but may reduce total output and thus be pro collusive when trade costs are below that threshold level

estimating economies of scope using profit function a dual approach of the normalized quadratic profit function abstract theoretical relationships between parameters of the normalized quadratic profit and cost functions are derived allowing for economies of scope to be calculated using profit function estimates an empirical example confirms that the cost function is recovered using the estimated profit function

mutual forbearance in experimental conglomerate markets we conduct economic experiments to gauge the level of cooperation between conglomerate rivals first we run control experiments to observe cooperation between subjects acting as duopolists in one of two markets in the control experiments subject pairs choose a quantity xi or yi from a payoff matrix in a repeated game relatively less cooperation is observed in the y market than in the x market a second series of experiments then combines the two payoff matrices to create a conglomerate setting facing each other in two markets opponents now choose an xi yi pair each period we find that conglomeration encourages more coperation in the y market but less cooperation in the x market time series analysis of our conglomerate subjects choices strongly supports the recent game theoretic propositions in bernheim and whinston 1990

the intertemporal dimension of neoclassical production theory abstract the aim of this survey paper is to provide a guide to the literature on optimal dynamic factor demands to the non specialist reader interested in applied work we start with the distinction between variable and quasi fixed factors of production and use these to characterize the firm s temporary equilibrium we then review the optimal intertemporal behaviour of the firm using the notion of adjustment costs as a means to solve the firm s optimization problem this process gives rise to a system of interrelated dynamic factor demands in a flexible accelerator format theoretical difficulties and empirical limitations of this model are discussed this fact leads us to review the theory of intertemporal duality we next analyze the issue of expectations in this class of dynamic models a section reviewing the empirical work on dynamic factor demands follows after which we offer some concluding remarks

an advantage of the multiproduct firm the transferability of firm specific capital abstract in a world of uncertainty particular benefits of multiproduct organization arise out of a need to revise production plans when transactions for inputs are costly production involves inputs which are firm specific the ability to transfer firm specific inputs withi n the multiproduct firm yields benefits not available to the single product firm these benefits to firm diversification are not dependent on the assumption of managerial risk aversion and cannot be replicated by investors diversifying their portfolios

dynamic model of fresh fruit promotion a household production approach many studies consider the dynamic effects of commodity promotion on demand but few derive the theoretical basis for these effects in a model of optimal consumer behavior this study develops a dynamic household production model of u s fresh fruit consumption which it uses to evaluate the effectiveness of advertising and promotion expenditures by the washington apple commission estimates from a dynamic dual generalized leontief system show direct advertising to be marginally more effective than retail promotion in increasing apple sales but advertising has positive spillover effects to sales of other fruits whereas promotion reduces sales of competing products

dynamic measures of scope and scale economies an application to german agriculture static concepts of multiproduct economies of scale and scope are extended into a dynamic setting within the cost of adjustment framework important properties of the dynamic measures are developed and the foundations of a dynamic theory of the firm generalizing static neoclassical theory are presented dynamic measures of scope and scale as well as shadow costs are estimated empirically for multiple output multiple input german dairy farms operating under a production quota causes of scope economies are explored and a conceptual model to predict the evolution of the production structure of german farms is formulated

dynamic and static behaviour with respect to energy use and investment of dutch greenhouse firms dutch greenhouse horticulture firms are energy intensive and major emitters of greenhouse gases this paper develops a theoretically consistent model that is able to describe the greenhouse firms behaviour regarding energy use and investments in energy technology the behaviour of the firm is modelled using a combination of a dynamic cost function and a static profit function framework the optimal quantity of energy is derived from the link between these two functions the model is applied to a panel of 97 dutch greenhouse firms over the period 2001 2008 the results show that most dutch greenhouse firms shift from being net electricity users to net electricity producers in the long term investing in energy capital contributes to reducing net energy use however it increases the quantity of carbon dioxide emissions due to an increase in electricity production a 1 increase of the price of gas reduces carbon dioxide emissions by 1 6

information sharing and tacit collusion in laboratory duopoly markets i introduction economists have long believed that enhanced information about demand conditions or rival actions can play an important role in facilitating collusion for example because it simplifies detection of chiselers stigler 1964 an extensive theoretical literature examines the incentives for non cooperative firms to share information through a trade association about some uncertain parameter see sakai 1990 1991 for a survey firms in these models may cooperate by sharing information in the trade association even though most authors assume that the firms choose non cooperative strategies in the product market under these conditions vives 1984 shows that with demand uncertainty substitute goods and quantity competition each firm s dominant strategy is to conceal information from its rivals therefore under these conditions non cooperative firms will not find it in their interests to form an information sharing arrangement such as a trade association because non cooperative firms should not wish to share information clarke 1983 392 concludes that information pooling mechanisms like trade associations can be considered prima facie evidence that firms are illegally cooperating to restrict output however kirby 1988 shows that non cooperative firms will want to share information if cost functions are sufficiently quadratic moreover hviid 1989 demonstrates that non cooperative firms will prefer to share information if they are sufficiently risk averse these models typically assume that firms interact once and identify the static subgame perfect nash equilibrium ne of the two stage information sharing game this is sensible when the goal is to focus on a narrow set of non cooperative equilibria because the set of non cooperative equilibria becomes very large in these models in the more complex repeated game however repeated interaction between competing firms seems more relevant for empirical applications especially for providing policy insight for trade associations that permit long term interactions among firms unfortunately empirical work in this area based on field data is challenging because the information different decision makers possess and the corresponding residual uncertainty they face are typically difficult to identify this paper uses a different empirical approach we use a series of laboratory duopoly markets to examine the impact of demand uncertainty on sellers output choices specifically we examine the importance of information sharing in facilitating tacit collusion under conditions of demand uncertainty 1 our experiment employs repeated interaction between fixed pairs of subjects trading the ability to directly test the static models for a more realistic policy relevant study of outcomes in the repeated game 2 our results indicate the extent to which results from static theory carry over to the repeated environment and can help guide future theory for dynamic oligopoly models of information sharing the experiment includes four distinct treatment conditions in the primary treatment sellers face uncertain demand but can eliminate uncertainty through voluntary mutual information sharing three control treatments identify the reasons for voluntary information sharing and determine if it leads to more collusive outcomes the first two control treatments eliminate sellers information sharing opportunities in the first control treatment sellers always remain uncertain about demand when choosing output while in the second control treatment sellers always have perfect demand information we refer to these control treatments respectively as forced no sharing and forced sharing throughout the paper the third control treatment sharply reduces collusion incentives by truncating demand while still allowing voluntary information transmission we refer to this control treatment as the truncated demand treatment the results briefly stated are as follows

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

internal cartel stability with time dependent detection probabilities abstract to account for the illegal nature of price fixing agreements per period detection probabilities that can vary over time are introduced in a dynamic oligopoly the resulting iccs for internal cartel stability indicate that for discount factors up to 10 per period detection probabilities of 5 are needed to reduce the number of cartel members by 50 for the special case of stationary supergames with constant per period detection probabilities p elegant rules emerge internal cartel stability requires the discount factor to increase with 100 p 1 p percent while a fixed fine of 100 1 p p percent of incremental cartel profits is required for making the icc always binding

the multivariate flexible accelerator model its empirical restrictions and an application to u s manufacturing this paper derives an exhaustive set of restrictions implied by the multistock flexible accelerator specification of the adjustment cost model for the firm the flexible accelerator specification of the demand for capital and labor is estimated using u s manufacturing annual data for the 1947 1976 period the consistency of the data with the model is examined by testing the validity of the derived restrictions finally the conditions which permit aggregation over firms are determined and tested empirically the flexible accelerator specification has been popular in the empirical literature on interrelated investment and employment decisions see nadiri and rosen 38 coen and hickman 10 and schramm 40 more recent examples include sargent 39 berndt fuss and wavermann 4 berndt and morrison 6 and meese 34 under suitable assumptions the specification may be rationalized by the adjustment cost model of the firm eisner and strotz 13 lucas 30 mortensen 35 extends the work of lucas and derives some empirically testable restrictions of the accelerator specification that are implied by the adjustment cost framework the broad objective of this paper is to provide a more rigorous and comprehensive test of the adjustment cost model than is presently found in the literature this objective is achieved in three stages first we offer an alternative derivation of the mortensen restrictions and more importantly we prove theorem 1 that his restrictions are exhaustive i e we establish an integrability result for the flexible accelerator adjustment cost model second the flexible accelerator specification of the demand for capital and labor is estimated using total u s manufacturing annual data for the 1947 76 period it is assumed that firms minimize expected production costs subject to a technology which implies that capital and labor stocks are costly to adjust while a third factor materials is freely adjustable the consistency of the data with the adjustmentcost framework is examined by testing for the validity of the derived restrictions further we test the validity of some separability restrictions on the adjustmentcost technology that to varying degrees are imposed a priori in all of the cited empirical studies finally we provide a complete characterization of the individual firm technologies which justify the common assumption of the existence of a representative firm this problem of aggregation over firms which has been

market and cost structure in the u s beef packing industry a plant level analysis a resurgence of consolidation in the u s meat packing industry in the past few decades has stimulated academic and policy debate issues raised include the role of cost economies in driving these patterns and the effects on the agricultural sector cattle producers from market power here plant level cost and revenue data for u s beef packing plants are used to estimate a cost based model incorporating cattle and output market pricing behavior the robust results indicate little market power exploitation in either the cattle input or beef output markets and that any apparent evidence is counteracted by cost efficiencies such as utilization and scope economies copyright 2001 oxford university press

off farm labour and the structure of us agriculture the case of corn soybean farms while the growing importance of off farm earnings suggests large benefits accrue to farmers from efforts to expand off farm income opportunities economic well being also depends on greater efficiency to comprehensively gauge the economic health of farm operator households off farm income is interpreted as an output along with corn soybeans livestock and other crops to accomplish this task two related methodologies were used first using 2000 data a multi activity cost function was set up to analyse labour allocation decisions within the farm operator household and also to estimate returns to scale and scope second using 1996 2000 data an input distance function approach was followed to estimate returns to scale cost economies and technical efficiency and the relative performance of farm operator households with and without off farm wages and salaries compared the cost function and input distance function results both suggest that off farm outputs and inputs can be modelled in a multi activi

asymmetric adjustment of dynamic factors at the firm level presents a study which addressed the deficiencies of previous studies the specification and estimation in the modeling of asymmetry and zero gross investment in the agricultural industry reference to previous studies on asymmetry information on the standard dual model results of the study

demons and repentance abstract this paper presents a new explanation for the stability of cartels for a large class of repeated cournot duopoly games with discounting strategies are constructed which have the property that cheating on the cartel is followed by repentance it is shown than these repentance strategies are subgame perfect equilibrium strategies and that in the presence of demons infrequently irrational behavior on the part of both players they lead to pareto superior expected discounted payoffs in comparison with either friedman s trigger strategies or abreu s stick and carrot strategies

can the survivor principle survive diversification the survivor principle holds that the competitive process weeds out inefficient firms so that hypotheses about efficient behavior can be tested by observing what firms actually do this principle underlies a large body of empirical work in strategy economics and management but do competitive markets really select for efficient behavior is the survivor principle reliable we evaluate the survivor principle in the context of corporate diversification asking if survivor based measures of interindustry relatedness are good predictors of firms decisions to exit particular lines of business controlling for other firm and industry characteristics that affect firms portfolio choices we find strong robust evidence that survivor based relatedness is an important determinant of exit this empirical regularity is consistent with an efficiency rationale for firm level diversification though we cannot rule out alternative explanations based on firms desire for legitimacy by imitation and attempts to temper

vertical integration and collusive incentives an experimental analysis abstract we consider vertically related industries with multiple downstream markets firms make simultaneous output choices in a repeated game upstream duopolists merge with producers in one of the downstream markets that also is a duopoly experimental duopoly markets are constructed to assess the effects of vertical integration upon outputs and profits we find that integration raises outputs in both downstream and upstream markets although only the upstream effect is statistically significant integrated profits are lower and consumer welfare is higher the integrated markets tend to equilibrate more quickly

towards an economic theory of the multiproduct firm this paper outlines a theory of the multiproduct firm important building blocks include excess capacity and its creation market imperfections and the peculiarities of organizational knowledge including its fungible and taut character a framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets neoclassical explanations of the multiproduct firm are shown to be seriously deficient