the economic consequences of reduced fertilizer use a virtual pricing approach the virtual pricing approach is applied to perform an ex ante analysis of reduced chemical use on agricultural output input demand and profitability aggregate data on indiana agriculture spanning the 1950 86 period are used to estimate parameters of a normalized quadratic profit function using bayesian techiques empirical results on the response of substitute and complementary inputs to a 15 and a 30 fertilizer restriction are obtained and the ad valorem taxes required to accomplish such restriction are calculated

adoption of new tobacco varieties in greece impacts of empirical findings on policy design abstract greece is a major international tobacco producer flue cured tobacco varieties constituted the major alternative crop to greek farmers growing certain oriental tobacco varieties diffusion of flue cured tobacco was rapid due to its high yields and the depressed market for certain oriental tobacco varieties currently the common organisation of the tobacco market is undergoing substantial changes and the farmers response will be a vital factor of success a portfolio selection model reveals that the major factors influencing the adoption decision of tobacco growers are the size of the farm measured in annual work units the farm s proximity to urban centres the farm s diversification and the farmer s age the number of contacts with institutions is surprisingly inversely related to adoption future tobacco policies impinging on factors influencing decisions to adopt new varieties or production practices may be more cost effective

pest externalities from agricultural inputs agricultural inputs such as water pesticide and even time may have the unintended effect of stimulating some pest populations leading to crop losses a conceptual model is developed to contrast optimal use of pesticide and nonpesticide inputs with myopic use patterns which ignore pest externalities under most conditions optimal management is found to entail reduced input levels these issues are illustrated for imperial valley cotton using biological simulation correct calculation of the relative profitability of conventional and integrated pest management techniques such as a shortened growing season are found to depend crucially on whether pest externalities are taken into account

third market reforms the overlooked goal of the sec s order handling rules in 1997 the securities and exchange commission enacted significant reforms in u s markets several studies document that the new order handling rules increased competition for nasdaq stocks but the reforms were designed with an additional goal in mind to increase quote competition for the trading of nyse listed securities on nasdaq i e third market trading an evaluation of the reforms in the third market indicates that they did not achieve this objective instead both quote quality and quoting frequency were diminished due primarily to elimination of the excess spread rule this suggests that more significant changes are needed to increase inter exchange competition

whose price wins institutional and technical change in agriculture the concern for environmental quality has become an increasingly dominant force for institutional and technical change in agriculture more recently surfaceand ground water pollution from agriculture have generated public debate over the economic potential of alternative production systems and the structure of farm policies however the ability to alleviate environmental problems through technical change is predicated upon prices and institutions in agriculture such as farm programs farm producers have little incentive to adopt new more environmentally sound production systems if existing prices and institutions remain unchanged they are more likely to adopt such technologies if institutions and prices adjust to reflect the concerns of environmental and consumer groups in effect whose price wins in the struggle over environmental quality will influence the future direction of technical change in agriculture environmental regulation has been traditionally looser in agriculture than in other sectors of the economy leman and paarlberg 1988 50 thus the farm sector s price for environmental resources has prevailed and farmers have had to worry little about internalizing the effects of their chemicals and soil erosion on ground and surface water stocks low or zero shadow prices of off site water sources have translated into low prices of other agricultural inputs that are linked to water pollution as antle and capalbo 1988 conclude agricultural and environmental policies have helped push u s farmers to adopt technologies that use chemicals and capital intensively partly because of water pollution from agriculture over 16 million in federal and state funds have been allocated to 78 projects under the usda s low input sustainable agriculture lisa program usda csrs 1990 2 this program is designed specifically to develop technologies that reduce the environmental impacts of agriculture production however as ekey and crosson 1988 found currently available alternative farming systems are less profitable tha conventional methods given current prices and government policies in the absence of price and farm program changes new innovations developed under he lisa program will probably face similar obstacles increasing public concern over water quality has sparked a new perhaps stronger conflict over whose price will govern water use bromley 1988 and howe 1980 suggest that the conflicting interests between those well served by existing institutions the farm sector and those bearing unwanted costs the public as represented by environmental and consumer groups are important theoretical and policy issues since conflict is created and mitigated by existing and new technologies and

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

fragmentation versus consolidation of securities trading evidence from the operation of rule 19c 3 stock exchanges defend their rules requiring members to trade listed stocks on an exchange floor as a means of achieving consolidation of trading which it is argued minimizes trading costs to investors by virtue of the securities and exchange commission s rule 19c 3 however these exchange rules cannot apply to stocks newly listed after april 26 1979 the objective of the securities and exchange commission rule was to end what was viewed as restraint of desirable competition that would more than compensate for any cost saving resulting from consolidation by comparing the cost of trading measured by bid ask spreads and returns variance for the two distinct groups of stocks those listed before april 26 1979 and those listed after we test these competing views we find that rule 19c 3 has not caused any reduction in spreads but may have caused an increase and has had no effect on returns variance

farm income support with minimal trade distortions abstract the stalemate in the gatt negotiations on agriculture is due to us insistence on the elimination of all subsidies while the european community and japan demand the right to support farmers this paper presents an alternative called production entitlement guarantees pegs that allow countries to satisfy farm support objectives yet minimize trade distortions pegs involve a limit on production receiving payments only the removal of all other forms of trade distorting market interventions is required such that consumers pay world market prices pegs would be negotiated and bound in the gatt and represent a politically acceptable method of supporting farm incomes

price discovery and the effects of fragmentation on market quality evidence from cypriot cross listed stocks using a novel high frequency data set we examine the contribution of greek trading to the price discovery process of a pair of cypriot blue chip cross listed stocks during overlapping trading hours additionally we investigate the effects of market fragmentation on the home market s quality as measured by microstructure based liquidity measures contrary to earlier studies from other markets our findings show that foreign stock exchanges can act as the leading contributors to price discovery and can concentrate the majority of trading activity and produce the lowest transaction costs our results also show that market fragmentation can lead to negative effects on market liquidity

oiling the palms restructuring of settlement schemes in malaysia and the new international trade regulations abstract the felda resettlement program in malaysia is internationally recognized as a success story in terms of cultivated area number of settlers and scope of vertical integration in the malaysian palm oil industry since the mid 1980s however a series of reorganizations of work and property rights in the settlement schemes have taken place it is argued here that the recent adjustments of felda are in accordance with the new rules for international regulation of agricultural production and trade in the wto international trade regulations increasingly influence the direction of socioeconomic and institutional struggles over rural reform programs in developing countries

agricultural product supplies and input demands regional comparisons governmental agencies at federal state and local levels in the united states are heavily involved in intervention in agricultural input and output markets to effect desired social goals the most pervasive intervention activities occur at the federal level they are available throughout the nation to most producers of specified commodities how

evaluating prior beliefs in a demand system the case of meat demand in canada an almost ideal demand system for meats is estimated using canadian data a bayesian approach is used to impose inequality restrictions on substitution elasticities via monte carlo integration and importance sampling in order to conform with prior beliefs about curvature and monotonicity restrictions and substitution relationships results are more consistent with the concavity and monotonicity restrictions from demand theory than with the added restriction that all meats are substitutes

soes trading and market volatility the national association of security dealers alleges that professional trader use of the small order execution system soes causes greater security price volatility we docu ment bidirectional granger causality between a proxy for professional soes trading the frequency of maximum sized soes trades and a measure of stock price volatility we find that high levels of volatility precede high levels of maximum sized soes trades suggesting that volatility causes more frequent large soes trades likewise over a one minute time interval high levels of maximum sized soes trades cause high volatility over longer periods however intense maximum sized soes trading causes lower volatility inter preted in conjunction with harris and schultz 1997 these results suggest that high levels of maximum sized soes trades lead to more efficient price discovery in light of these results we believe that efforts to eliminate soes based on volatility considerations are unwarranted

fungicide use under risk in swiss wheat production abstract the short run effects of fungicide application on economic risk and the effects of risk on fungicide use in swiss wheat production are empirically explored a quadratic production function model is developed with the help of the moment based approach marginal contributions of fungicides representing controlled inputs and of rain representing uncontrolled inputs to the variances of yield and revenue are analyzed it is not possible to show risk reducing effects of fungicides on yield or revenue at low rain quantities during the vegetation period fungicides have a statistically significant risk increasing effect on revenue increasing risk leads swiss wheat growers to use more fungicide this increase is statistically significant at higher levels of revenue for example when risk is doubled fungicide inputs are raised by 44 at the highest revenue quartile

the aaea ever growing and changing research challenges the changing economic conditions over the past century along with changes in technology and developments in economic theory and quantitative methods helped shape the profession we currently refer to as agricultural and applied economics the broadening of the profession from the original focus on the farm and agricultural industry to encompass international affairs governmental policies resources and environmental and rural affairs is discussed within this context emergence of the subdisciplines and some of the major individual contributions are noted the final section argues that members of the profession are well positioned to continue contributing research that will help society achieve its goals and notes six challenges that provide such opportunities

intergenerational transfers and the social discount rate this paper investigates the relationship between intergenerational asset transfers and the choice of the discount rate for use in cost benefit analysis in a model of a competitive overlapping generations economy constrained by a socially managed exhaustible resource provided that there are no distortions in capital markets and that all agents hold perfect foresight cost benefit techniques will result in a pareto efficient resource allocation if the discount rate is set equal to the market rate of interest but since the path of the interest rate depends on the level of intergenerational transfers cost benefit techniques do not ensure a socially desirable distribution of welfare between generations a social optimum will result only if intergenerational transfers are properly chosen and enforced decentralized private altruism may result in intergenerational transfers that both present and future individuals would agree are too small if members of the present generation attach positive weight to the general welfare of future generations not simply their personal descendants in a world where intergenerational transfers are non optimal second best policy making may imply a constrained optimum that is inefficient together these findings suggest that cost benefit analysis is at best a partial criterion to policy formulation that should be used only in conjunction with ethical principles that define the proper distribution of welfare between present and future generations

human capital adjustments in subjective probabilities and the demand for pest controls in addition to risk aversion farmer behavior in an uncertain environment is governed by subjective probability estimates of random events the estimates given here lend support to the idea that human capital development can improve farmers ability to estimate pest damage probabilities more accurate assessment of subjective probabilities leads to lower pesticide use and increases the use of labor intensive pest controls the human capital variables with the largest effects are formal schooling and farmer experience with smaller impacts from field scouting and extension schools

natural resource economics and conservation contributions of agricultural economics and agricultural economists research by agricultural economists on natural resources has been distinguished by an interdisciplinary emphasis and a dynamic perspective it has recognized technological and institutional constraints has been oriented toward solving concrete resource management and policy problems and has emphasized empirical and quantitative analysis agricultural economists have introduced methods for evaluating natural resource conservation efforts for predicting adoption of resource conservation technologies and for designing efficient and sustainable resource management policies they have identified ways of improving land management and preventing land degradation proposed reforms of institutions governing water allocation and water quality and introduced policies for balancing environmental and efficiency considerations in the management of pests biodiversity and livestock diseases their research has had substantial impacts on the formulation of resource conservation policies

strategies for sustainable development of less favored areas discussion development based on indicators of change in the natural capital stock alone such as the indicators used by kerr and by pgb e this constrained maximization problem for sustainable development leads to two linked objectives increase in wealth and maintenance of the capital stock especially the natural capital stock returning to our metaphor the elephant must enjoy feeding without trampling and overgrazing the bush through this elephantine lens on sustainable development the disparate research questions of the three articles fit into view fan and hazell explicitly look at changes over time addressing the wealth maximization objective of the sd problem at the district scale within two huge countries they find that agricultural investment in the less favored areas leads not only to higher marginal rates of return but also to sharper declines in poverty incidence they speculate scott m swinton is associate professor in the department of agricultural economics at michigan state university this article was presented in a principal paper session at the aaea annual meeting chicago il august 2001 the articles in these sessions are not subjected to the journal s standard refereeing process

do competing specialists and preferencing dealers affect market quality we empirically demonstrate that the opportunities the boston stock exchange and the cincinnati stock exchange offer members to take the other side of their customers orders through affiliated market makers to internalize orders have little short run effect on posted or effective bid ask spreads this is true despite substantial movement of order flow away from the new york stock exchange when trading under one of these regional stock exchange programs begins these results contrast with the adverse effects of market fragmentation and internalization predicted by some theoretical market microstructure analyses and the popular financial press article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

does the specialist matter differential execution costs and intersecurity subsidization on the new york stock exchange this article tests for differences in execution costs among specialist firms for new york stock exchange listed securities execution cost differences provide a measure of the relative performance of specialist firms we find a substantial difference in effective spreads and order processing costs across specialist firms controlling for stock characteristics while economically significant the differences in execution costs between specialist firms are much smaller than the cross market differences reported by huang and stoll 1996 within a specialist firm there is a positive relation between order processing costs and trading activity that is consistent with the hypothesis that active stocks subsidize inactive stocks this article investigates whether differential execution costs exist across new york stock exchange nyse specialist firms and among stocks traded by the same specialist firm execution costs are paid by investors when completing a trade and are separate from the commission costs paid to a broker execution costs arise from the bid ask spread and the price impact of an investor s order on the future bid ask quote stoll 1985 shows that a transactionally efficient financial market which minimizes execution costs also minimizes the deviation in transaction prices from the true price of the underlying security evidence of differential execution costs for similar securities can be used to identify high cost and low cost liquidity providers on the nyse furthermore differential execution costs among stocks traded by the same specialist firm provide evidence consistent with a subsidy from actively traded to inactively traded stocks

sustainable development challenges to profession of agricultural economics fundamentally sustainable development is a notion of discipline disciplining our current consumption this sense of intergenerational responsibility is a new political principle a virtue that must now guide economic growth the industrial world has already used so much of the planet s ecological capital that the sustainability of future life is in doubt that can t continue brundtland page 5

competition among markets the repeal of rule 390 abstract the new york stock exchange repealed its rule 390 on may 8 2000 the rule disallowed exchange members from trading stocks listed prior to april 26 1979 outside of an exchange we examine the implications of the rule s repeal on the competition for order flow as well as on measures of market quality such as spreads depth and price improvement for stocks impacted by the rule we use a second sample of stocks not subject to rule 390 rule 19c 3 stocks to control for market wide trends we have three important findings 1 quoted spreads decrease by about 18 for rule 390 stocks three times more than the reduction for rule 19c 3 stocks 2 effective spreads do not change and 3 the nyse lost little market share even in smaller trades that were supposed to migrate following the repeal our results indicate a paradigm shift in the way the nyse specialists make a market prior to the repeal the specialists set wider quotes but provided extensive price improvement following the repeal the specialists set tighter quotes with lesser price improvement possibilities we believe that this shift is a strategic response by the specialists to retain market share not by improving market quality but by making order flow internalization and payment for order flow less profitable as a result competition improves market quality but not in the way we would generally expect

farmers subjective probabilities in northern thailand an elicitation analysis the ability of agricultural decision makers to formulate logical expectations about the outcome of risky events in crop production and marketing is investigated measures of northern thailand farmers perceptions of yield price and net income are attempted using an elicitation approach which includes a significant monetary reward this approach is found to be feasible the expectations derived are logical and consistent when compared to harvest results and farmers actual production practices farmers expectations about sources of risk and the correlation of socioeconomic characteristics with expectation accuracy are analyzed economic decision theory recognizes the importance of decision makers expectations about future uncertain events these expectations often are expressed as subjective probability distributions dillon roumasset however they have not been widely used in empirical analyses because they are difficult to observe and measure this paper discusses an empirical elicitation approach the accuracy and consistency of the elicited expectations and various relationships in the results specifically the paper reports an experiment in thailand to elicit farmers subjective probability distributions of price yield and net income of selected crops first the concept of subjective probability is discussed followed by a description of the study area and the elicitation procedure then elicited expectations are compared to the actual harvest results using the stochastic dominance criterion we analyze the elicited net income distributions to determine if actual production plans were consistent with stated beliefs third we hypothesize and test the following relationships using expected values and variance measures of the distributions a the correlation between the expected value of prices and yields b comparison of the coefficients of variation of expected prices and yields c correlation between the expected values and variances of the distributions and d comparison of the sample cross section variance of actual prices and yields with the average variance of the price and yield distributions finally the absolute difference between the actual results and the expected value of rice prices and yields are regressed on socioeconomic characteristics of the decision

land allocation in hyv adoption models an investigation of alternative explanations microeconomic theory provides four competing explanations for partial land allocation to new and traditional seed varieties in hyv adoption decisions input fixity portfolio selection safety first behavior and learning testing a general model that contains each as a special case suggests that they are jointly most likely to explain land allocation in the hyv adoption decisions of malawian smallholders yet when each explanation is tested to the exclusion of the others as is usually the case in the literature competing hypotheses are individually significant results suggest that employing approaches based on single explanations may lead to inappropriately narrow conclusions

once bitten twice shy abstract moving away from output related price support towards productionneutral direct income support decoupling is the essence of the macsharry plan for cap reform but the actual reform proposals fail to live up to the original grand design for arable products the proposed direct aids per ha turned out to be far from decoupled for milk no attempt is made to bring quota levels into line with effective demand the gatt panel found that the new regime still impairs the oilseed tariff bindings the conflict could be solved and cap reform considerably improved if the ec were to reform the direct payments per ha for oilseeds and cereals and move towards genuine decoupling

quote based competition and trade execution costs in nyse listed stocks abstract this study examines quotations order routing and trade execution costs for seven markets that compete for orders in large capitalization nyse listed stocks the competitiveness of quote updates from each market varies with measures of the profitability of attracting additional order and with volatility and inventory measures the probability of a trade executing on each market increases when the market posts competitive quotes execution costs for non nyse trades when the local market posts competitive non competitive quotes are virtually the same substantially exceed costs for matched nyse trades collectively these results imply a significant degree of quote based competition for order flow and are consistent with off nyse liquidity providers using competitive quotations to signal when they are prepared to give better than normal trade executions

high frequency trading competition we analyze trading dynamics as successive high frequency trading hft firms begin to trade stocks in an equity market entrants compete with incumbents for volume and there is crowding out

lessons for the world from us agriculture unbundling technology abstract take as a goal the adequate nourishment of all human beings by the middle of the next century when the human population will be near double its 1980 level with much of the increase occurring in the poorest areas of the world there is a great need to keep food prices low however we must consider the additional goal of sustainability can agricultural sustainability be achieved while producing the required volume of food at low cost this paper will argue that economic development does not require that food be as cheap or agricultural practices be as labor saving as is often assumed

competition and collusion in dealer markets this article develops a game theoretic model to analyze market makers intertemporal pricing strategies we show that dealers who adopt noncooperative pricing strategies may set bid ask spreads above competitive levels this form of implicit collusion differs from explicit collusion where dealers cooperate to fix prices price discreteness or asymmetric information are not required for collusion to occur rather institutional arrangements that restrict access to the order flow are important determinants of the ability to collude because they reduce dealers incentives to compete on price public policy efforts to increase interdealer competition should focus on such restrictions

directly unproductive profit seeking dup activities this paper propses directly unproductive profit seeking dup activities as a general concept that embraces a wide range of recently analyzed economic activities including the subset of rent seeking activities considered by krueger it then proceeds to provide a synthesis and generalization of the welfare theoretic analysis of such activities by developing a fourfold categorization of cases depending on the levels of distortions before and after the dup activity thus a unification and overview of the subject are achieved

competing with the new york stock exchange research on information economics and securities markets dating back to stigler journal of political economy 69 1961 213 225 journal of business 37 1964 117 142 argues that trading will tend to centralize in major market centers such as the new york stock exchange nyse the nyse s recent mergers with archipelago and euronext bring questions about the viability and effects of competition between stock exchanges to the policy forefront we examine the largely forgotten but unparalleled episode of competition between the nyse and the consolidated stock exchange of new york consolidated from 1885 to 1926 the consolidated averaged 23 of nyse volume for approximately forty years by operating a second market for the most liquid securities that traded on the big board our results suggest that nyse bid ask spreads fell by more than 10 when the consolidated began to trade nyse stocks and subsequently increased when the consolidated ceased operations the empirical analysis suggests that this historical episode of stock market competition improved consumer welfare by an amount equivalent to us 9 6 billion today

on agricultural sustainability and its measurement in small scale farming in sub saharan africa abstract we argue in this paper that there is a need to bring the current debate on sustainability down to a more pragmatic level to operationalise sustainability given the diversity of agricultural systems throughout the world the best that is possible may be to develop proximate definitions that do generate testable theories as we try to do in this paper by developing a pragmatic and measurable definition of the concept which is relevant to small scale farming in sub saharan africa the definition we offer takes the community of the village agroecosystem as a relevant and embracing social and spatial unit of analysis it is based on the anthropocentric value judgement that future generations must have the same range of options concerning the use of agroecosystems as the current generation given that village agroecosystems generate various environmental amenities for the human communities this value judgement means that a sustainable agroecosystem is one which has the capacity to respond to exogenous change as well as to internal disruptions by maintaining non declining trends in its resources and amenities over a period of at least one decade the approach we advocate has the dual dangers of over simplification and the creation of tautologies it should always be borne in mind that the criteria of sustainability may differ from ecosystem to ecosystem zone to zone nation to nation each situation should be scrutinised for the essential criteria for assessment which may be different and greater or lesser in number than those we have proposed as a generality we do maintain however that for progress in sustainability assessment this process of choice should be based on the principle of parsimony tautology the erection of self fulfilling predictions is a more fundamental danger in the approach we have taken we have emphasised several times the necessity of rigorous testing of hypotheses concerning the determinants of each of the components of sustainability that we have described this is the real challenge to the researcher but insight into the design of appropiate experiments may be gained from preliminary application of pragmatic tests of relative sustainability of the type described here we try to avoid ecological and economic dogma as far as possible in our discussion of sustainability attempting to argue instead from what we actually observe in the systems we study whilst a great deal of ecological and economic theory may seem at first look to be applicable to the analysis of the sustainability of small scale agricultural systems we find that closer analysis reveals the inapplicability of much of what has been subsumed under the titles of agroecology or natural resource economics concepts such as stress and disturbance stability and diversity community structure economic optimality maximum social welfare do not on inspection provide particularly strong predictive power particularly when applied to the dynamics of resource poor small scale community structured and to a non negligible extent non market driven agricultural systems

does order preferencing matter 1we would like to thank david easley eugene kandel the referee g william schwert the editor participants at the dealer markets conference at ohio state university and an anonymous referee for helpful comments we gratefully acknowledge financial support from the johnson graduate school of management and the national science foundation 1 abstract this study examines how order preferencing affects the competitiveness and efficiency of laboratory financial markets we operationalize preferencing by allowing some dealers to execute a portion of the order flow by matching the most favorable quotes available increasing the proportion of order flow that is preferenced can increase bid ask spreads reduce the informational efficiency of prices and benefit dealers at the expense of liquidity traders preferencing has none of these effects however when two or more dealers are not receiving preferencing orders preferencing may significantly degrade market performance if preferencing arrangements affect all or virtually all dealers

environmental economics an evolutionary critique and a plea for pluralism abstract environmental economics is a contradiction in terms the contradiction is intuitive to the puzzled lay person inquiring about the nature of our subdiscipline it is explicit to those who think of environmental systems in terms of complex evolving interconnectedness and identify the economic model with the atomistic and mechanistic assumptions of classical mechanics within the subdiscipline we try to resolve the contradiction by internalizing externalities by matching market feedbacks with environmental relations while acknowledging that insights can be drawn from the market view of environmental problems i argue in this essay that 1 the contradiction is nerver resolved 2 multiple incongruous perspectives are all we have for understanding the interface between economic and environmental systems and 3 environmental economics will thrive with a return to philosophical pluralism to the open acceptance of the contradiction

intergenerational competitive equilibria under technological uncertainty and an exhaustible resource constraint abstract this paper presents a model of competitive intertemporal equilibrium in a finite horizon overlapping generations economy facing technological uncertainty and an exhaustible resource constraint individuals form rational expectations regarding future prices and economic conditions and income is redistributed from one generation to the next through government mandated lump sum transfers under uncertainty the relationship between resource price appreciation and the interest rate is mediated by consumers risk aversion with respect to consumption in alternative states of nature the intuitively appealing proposition that the expected resource price rises at the expected rate of interest holds only as a special case if future generations are taken to be state contingent in the sense that their composition depends on the states of nature prevailing when they are born then equilibria are generally pareto efficient but if future generations are state independent so that the set of individuals born at a given date is independent of the prevailing state of nature then equilibria may be inefficient because markets do not exist where successive generations may equilibrate their marginal rates of substitution across consumption in alternative contingent states such inefficiencies may be remedied through the implementation of appropriate intergenerational transfers an optimal intergenerational welfare distribution may be supported as a competitive equilibrium if the income transfer regime is properly selected and enforced the social optima that result for a simple version of the model under the maximin welfare criterion indicate that greater sacrifices are required on the part of the present generation when future generations are taken to be state contingent than when they are regarded as state independent this finding provides a possible explanation for the extreme risk aversion of conservationists with respect to the welfare of future generations

econometric estimation of producers risk attitudes general methods are proposed for the identification and econometric estimation of the parameters of the distribution of risk attitudes in a producer population the proposed methods also provide the basis for the development of statistical tests of model specification and of behavioral hypotheses econometric risk attitude estimation is shown to be possible under less restrictive conditions than previously believed a moment based version of the general model is applied to indian data and the econometrically estimated risk attitudes are presented and compared to experimental results for a similar group of producers

quotes order flow and price discovery the goal of this article is to examine the impact of 1975 congressional mandate to integrate the trading of nyse listed stocks the conclusions are most of the time the new york stock exchange nyse quote matches or determines the best displayed quote and the nyse is the most frequent initiator of quote changes non nyse markets attract a significant portion of their volume when they are posting inferior bids or offers indicating they obtain order flow for other reasons such as payment for order flow yet when a non nyse market does post a better bid or offer it does attract additional order flow

third market broker dealers cost competitors or cream skimmers this article compares the bid ask spread for new york stock exchange nyse listed securities before and after a major third market broker dealer bernard l madoff investment securities madoff begins to selectively purchase and execute orders in those securities tests reveal the quoted bid ask spread tightens when madoff enters the market furthermore trading costs as measured by the difference between the transaction price and the midpoint of the contemporaneous bid ask spread do not increase together these results suggest that the adverse selection problem associated with allowing agents to selectively execute orders in exchange listed securities may be economically insignificant

low input agriculture trends goals and prospects for input use low input agriculture lia has reemerged as an issue of the day it was last a topical issue during the 1970s energy crisis when the focus was on reducing our reliance on petroleumbased inputs klepper et al lia s current popularity is similarly motivated but supported by growing evidence of environmental and health risks from agrichemicals the drop in commodity prices and farm equity value which occurred between 1981 87 has rekindled interest in developing cost reducing technologies accumulated evidence on groundwater quality effects of nitrogen fertilizer and pesticides nielsen and lee has triggered numerous state and federal proposals and administrative actions with respect to agrichemicals and the environment concerns about costs of production and environmental effects are formalized in a recent u s department of agriculture usda statement which supports research and education on alternative farming systems that decrease or optimize the use of purchased inputs and that can increase net cash returns through decreased costs of production and may effectively improve the competitive position of the farmer and decrease the potential for adverse environmental impacts usda we question whether widespread employment of systems that concurrently meet these multiple objectives can occur under existing technology farm policy and economic conditions our argument rests on two basic assumptions profit maximization is a strong motivation for production decisions and externality issues are the driving force for public ncouragement of intervention to selectively reduce purchased input use we hypothesize that current high demand for agrichemicals coincides with profit maximizing levels of input use to the extent that empirical evidence supports this hypothesis the real debate involves the forms of intervention available to internalize externalities

valuation and management of tropical forests implications of uncertainty and irreversibility this paper develops a framework for the valuation and management of tropical forests that reflects their ecological and economic characteristics the analysis demonstrates the importance of modeling the feasible use patterns and the information structure in tropical forest management decisions the model predicts that cases exist where the foresighted management of forests leads to more preservation than the traditional expected value approach an application in thailand provides evidence that such cases occur in relevant ranges of benefit flows the model focuses tropical forest management on assessments of sustainability and feasible sequences in light of uncertainty and information flows

induced agricultural innovation and environmental quality the case of groundwater regulation induced innovation in agriculture includes the impacts of technology on environmental quality the induced innovation hypothesis maintains that technological change substitutes abundant factors for scarce ones hayami and ruttan 1985 this hypothesis may be extended by arguing that agricultural technology change often affects the quality of factors of production such as groundwater or soil fertility once adopted for example irrigation technology may affect groundwater quality yet the market often fails to reflect the scarcity value of environmental quality characteristics

constraints on the design of sustainable systems of agricultural production abstract in this paper i review the evolution of the sustainability concept this is followed by a description of three classical systems of sustainable agriculture none of these systems were or are capable of generating growth of output consistent with modern rates of growth in demand i then turn to three unresolved analytical issues that continue to divide the conventional resource economics and the sustainable development communities in a closing section i argue sustainable growth in agricultural production should be viewed as a research agenda rather than as a package of practices that is available to producers whether in developed or developing countries

protectionist re balancing or market oriented reform ec oils and fats policy abstract the liberal nature of the ec oils and fats regulation no variable import levies but tariffs combined with deficiency payments has allowed ec consumers and processors to benefit from free access to world markets the spectacular growth in ec oilseeds production mirrored in a corresponding rise in ec oilseeds expenditure has triggered off various proposals which would undermine the liberal nature of the oils and fats regime re balancing is the latest of these but would be contrary to the very aims of the uruguay round and to the objectives of the ec s trade policy as set out in the ec treaty rather than aiming at re balancing the ec should therefore consider market oriented reform

implications of 1992 for eec farm and food policies abstract three broad issues are first discussed article 8a of the eec treaty does not in itself ensure that a single market will be effected on 1 january 1993 the protocol on german internal trade raises particular difficulties and third countries particularly in the context of the gatt talks must not be neglected green money and monetary compensatory amounts mutual recognition irradiation and non returnables in denmark are four particular policy issues discussed before the question is raised whether 1992 will bring benefits few studies of the impact of 1992 have been published and none can be said to have definitively answered this question

an examination of changes in specialists posted price schedules new york stock exchange specialists disseminate information to market participants by displaying price schedules consisting of bid prices ask prices bid depths and ask depths we examine how specialists update these price schedules in a simultaneous equations model we find that changes in the best prices and depths on the limit order book have a significant impact on the posted price schedule while the effects of transactions and order activity are secondary furthermore we show that specialists revise prices and depths differently but find no evidence that they revise the price schedule in response to changes in inventory article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

does the limit order routing decision matter we examine the impact deciding to route limit orders away from the new york stock exchange nyse has on three dimensions of execution quality with methodologies controlling for market conditions and order submission strategies overall differences in limit order execution quality between regional stock exchanges and the nyse are small suggesting that the order routing decision may not affect retail limit order traders substantively conditioning on the distance between the limit order s price and prevailing quotes however reveals systematic differences in execution quality this implies that brokers can strategically route limit orders to improve retail limit order execution quality copyright 2002 oxford university press

preferencing internalization of order flow and tacit collusion evidence from experiments this paper examines preferencing arrangements and tacit collusion in laboratory asset markets in the experiments dealers may internalize by matching the best quote or by passing orders to the dealer posting the best quote although some markets were highly competitive several markets reached a collusive equilibrium with wide spreads and near complete intemalization of order flow the paper further examines the role of market transparency and passed order flow on quote setting behavior and suggests that these affect the mechanism leading to tacitly collusive equilibria

pests and pesticides risk and risk aversion abstract theoretical and applied literature on risk in decision making for agricultural pest control is reviewed risk can affect pesticide decision making either because of risk aversion or because of its influence on expected profit it is concluded that risk does not necessarily lead to increased pesticide use by individual farmers uncertainty about some variables such as pest density and pest mortality does lead to higher optimal pesticide use under risk aversion however uncertainty about other important variables such as output price and yield leads to lower optimal levels of pesticide use neglect of these variables in most studies has led to the false assumption that pesticides are always risk reducing inputs furthermore there is evidence that in general the pesticide dosage which maximises expected profit is lower under risk than under certainty depending on the balance of forces to increase and decrease pesticide use under risk in many circumstances the net effect of risk on optimal decision making for pest control may be minimal the effect on risk of information about pest density and other variables as in integrated pest management programmes is discussed evidence on this issue is mixed a range of analytical techniques for analysing risk in pest control is reviewed throughout the paper gaps in the existing literature are identified

sources of growth in french agriculture since the slowdown in the growth of world agricultural trade in 1980 the united states and the european community ec have engaged in a series of debates over their respective agricultural policies high producer prices and the general absence of production controls in europe have been of particular concern in the united states as world grain stocks have risen and the ec has emerged with substantial subsidies as a net cereals exporter levels of frustration have increased on both sides of the atlantic as the united states has responded with its own export enhancement payments and other costly policies with current positions difficult to sustain the united states and some members of the european community now seek means to limit their conflict and obtain relief from the high costs of their agricultural programs the reduction of grain stocks resulting from the drought affect

an empirical study of the effect of rule 19c 3 the extent to which all orders for common stocks should be consolidated that is sent to a single marketplace and the effect of consolidation on competition in the securities markets have been the subject of much debate in the past quarter century this debate has focused on offboard trading restrictions for member firms for example new york stock exchange nyse rule 390 and american stock exchange amex rule 5 and on the institution of appropriate intermarket linkages for example the consolidated transactions tape the consolidated quotations system and the intermarket trading system while the securities and exchange commission sec has attempted to promote competition in the securities markets the results of its efforts are uncertain consequently the consolidation fragmentation debate continues in this article we examine a very specific case in which the sec tried to increase the degree of competition in market making rule 19c 3 allowed off board trading of nyse listed stocks by exchange members as we will show this rule had both beneficial and adverse effects section i describes rule 19c 3 the environment which led to its introduction and the controversy surrounding it in section ii we examine the effect of rule 19c 3 on over the counter otc market making activity we find that for about 34 percent of the eligible stocks the introduction of exchange member market makers increased the total level and also the continuity of otc market making activity in section iii we find that rule 19c 3 has had a statistically significant effect in reducing percentage bidask spreads which ceteris paribus is desirable in section iv our analysis shows that rule 19c 3 has led to an increase in returns variance which ceteris paribus is undesirable finally our summary and conclusion are presented in section v

short and long run adjustments in dairy production a profit function analysis a dual profit model is developed to analyse the structure of dairy technology using farm level data for vermont potential short and long run effects of milk price reductions on output supply input demand farm size and profitability are studied the observed levels of the quasi fixed inputs family labour and herd size are found to be significantly lower than their optimal or long run equilibrium values which is consistent with a continuing shift towards fewer and larger dairy farms the analysis suggests that lower milk prices threaten the short run survival of small and medium size farms and reduce the optimal farm size in the long run

effects of market reform on the trading costs and depths of nasdaq stocks the relative merits of dealer versus auction markets have been a subject of significant and sometimes contentious debate on january 20 1997 the securities and exchange commission began implementing reforms that would permit the public to compete directly with nasdaq dealers by submitting binding limit orders additionally superior quotes placed by nasdaq dealers in private trading venues began to be displayed in the nasdaq market we measure the impact of these new rules on various measures of performance including trading costs and depths our results indicate that quoted and effective spreads fell dramatically without adversely affecting market quality

make take structure and market quality evidence from the u s options markets we examine the make take structure which compensates liquidity suppliers and charges liquidity demanders in the options markets where it competes with a traditional structure that uses payments for order flow using the introduction of the make take structure as an event we find that execution costs including fees for liquidity demanders decline after the event for the affected options that the make take structure encourages market makers to improve quoted prices and that brokers change their routing behavior to include fees in the routing decision the decline in execution costs is consistent with the benefits of the increased quote competition from the make take structure prevailing over the fees the structure charges to liquidity demanders this paper was accepted by wei jiang finance

willingness to pay estimates using the double bounded dichotomous choice contingent valuation format a test for validity and precision in a bayesian framework the double bounded dichotomous choice db dc contingent valuation format is thought to yield more precise welfare estimates questions remain about its validity the initial bid may represent information with which respondents update their willingness to pay a bayesian model of respondent decision making is estimated for two data sets the results indicate updating or shifts in respondent willingness to pay between iterated valuations nonparametric testing of the welfare estimates reveals that the model incorporating updating yields different values from the standard model the expected increases in the precision of the db dc welfare estimates are lost when updating occurs

payments for order flow on nasdaq we present a model of nasdaq that includes the two ways in which marketmakers compete for order f low quotes and direct payments brokers in our model can execute small trades through a computerized system preferencing arrangements with marketmakers or vertical integration into market making the comparative statics in our model differ from those of the traditional model of dealer markets which does not capture important institutional features of nasdaq we also show that the empirical evidence is inconsistent with the traditional model which suggests that preferencing and vertical integration are important components in understanding nasdaq

the economic growth debate what some economists have learned but many have not one thing economists should have learned from the economic growth debate is the importance of defining the term growth by growth i mean quantitative increase in the scale of the physical dimensions of the economy i e the rate of flow of matter and energy through the economy from the environment as raw material and back to the environment as waste and the stock of human bodies and artifacts by development i mean the qualitative improvement in the structure design and composition of physical stocks and flows that result from greater knowledge both of technique and of purpose simply put growth is quantitative increase in physical dimensions development is qualitative improvement in non physical characteristics an economy can therefore develop without growing just as the planet earth has developed evolved without growing neoclassical growth models notwithstanding there is good evidence that neither the earth s surface nor the flux of solar energy grows at a rate equal to the rate of interest in fact they seem not to grow at all yet qualitative evolution occurred and continues to occur two general classes of limits to growth in the above defined sense can be further distinguished biophysical limits and ethicosocial limits in both cases it is growth not development that is limited there may or may not exist limits to development but that is another topic standard neoclassical economics was built on the assumption that the economy is far from both limits i e that it is always biophysically possible and ethicosocially desirable for aggregate product to grow as abramowitz l put it echoing pigou

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