precautionary saving in the small and in the large the theory of precautionary saving is shown to be isomorphic to the arrow pratt theory of risk aversion making possible the application of a large body of knowledge about risk aversion to precautionary saving and more generally to the theory of optimal choice under risk in particular a measure of the strength of the precautionary saving motive analogous to the arrow pratt measure of risk aversion is used to establish a number of new propositions about precautionary saving and to give a new interpretation of the dreze modigliani substitution effect copyright 1990 by the econometric society

smallholder market participation concepts and evidence from eastern and southern africa abstract this paper reviews the evidence on smallholder market participation with a focus on staple foodgrains i e cereals in eastern and southern africa in an effort to help better identify what interventions are most likely to break smallholders out of the semi subsistence poverty trap that appears to ensnare much of rural africa the conceptual and empirical evidence suggests that interventions aimed at facilitating smallholder organization at reducing the costs of intermarket commerce and perhaps especially at improving poorer households access to improved technologies and productive assets are central to stimulating smallholder market participation and escape from semi subsistence poverty traps macroeconomic and trade policy tools appear less useful in inducing market participation by poor smallholders in the region

operating flexibility global manufacturing and the option value of a multinational network the multinational corporation is a network of activities located in different countries the value of this network derives from the opportunity to benefit from uncertainty through the coordination of subsidiaries which are geographically dispersed we model this coordination as the operating flexibility to shift production between two manufacturing plants located in different countries a stochastic dynamic programming model treats explicitly this flexibility as equivalent to owning an option the value of which is dependent upon the real exchange rate the model is extended to analyze hysteresis effects and within country growth options we show that the management of across border coordination has led to changes in the heuristic rules used for performance evaluation and transfer pricing

proper risk aversion on introduit et on etudie une condition comportementale significative sur les fonctions d utilite pour les richesses qui signifie qu une loterie indesirable ne peut jamais etre rendue desirable par la presence d une loterie indesirable independante

standard risk aversion this paper introduces the concept of standard risk aversion a von neumann morgenstern utility function has standard risk aversion if any risk makes a small reduction in wealth more painful in the sense of an increased reduction in expected utility also makes any undesirable independent risk more painful it is shown that given monotonicity and concavity the combination of decreasing absolute risk aversion and decreasing absolute prudence is necessary and sufficient for standard risk aversion standard risk aversion is shown to imply not only pratt and zeckhauser s proper risk aversion individually undesirable independent risks always being jointly undesirable but also that being forced to face an undesirable risk reduces the optimal investment in a risky security with and independent return similar results are established for the effect of broad class of increases in one risk on the desirability of or optimal investment in a second independent risk

marketed surplus under risk do peasants agree with sandmo using a newly defined notion of aversion to income risk the behavior of the marketed surplus producer under price risk is characterized unlike the familiar case first examined by sandmo output depends on both ordinal preferences for goods and on risk attitudes conditions are found that yield an output level under risk that is smaller than under certainty if these conditions do not hold both risk and risk aversion may have a positive effect on output implications for econometric studies of risk attitudes are considered and illustrated with an example finally we examine the effect of uncertainty on the peasant s long run equilibrium

portfolio optimization with stochastic dominance constraints abstract we consider the problem of constructing a portfolio of finitely many assets whose return rates are described by a discrete joint distribution we propose a new portfolio optimization model involving stochastic dominance constraints on the portfolio return rate we develop optimality and duality theory for these models we construct equivalent optimization models with utility functions numerical illustration is provided

price and expenditure elasticities for fresh fruits in an urban food desert this study addresses the knowledge gap concerning the demand for fresh fruit in an urban food desert where healthy foods are scarce by definition using register data from a non profit greengrocer

food quality changes and implications evidence from the rice value chain of bangladesh summary in dhaka the share of the less expensive coarse rice is shown to be rapidly decreasing in rice markets and it thus seems that the role of rice as only a cheap staple food is being redefined the increasing demand for the more expensive varieties is seemingly associated with a more important off farm food sector in particular milling retailing and branding as well as a transformed milling industry we further find that the labor rewards for growing different rice varieties are not significantly different and that farmers do not benefit directly from consumers increased willingness to pay for rice

a hedonic approach to estimating the supply of variety attributes of a subsistence crop the article extends the household hedonic model by estimating a supply function for variety attributes of a subsistence crop in a developing economy the model is applied to bananas in uganda making use of disaggregated data on variety specific farm gate banana bunch prices and attributes while accounting for the semisubsistence nature of banana producing households the article is motivated by the need to understand the attribute trade offs made by farmers at the farm gate in light of targeted variety improvement efforts and their impact on banana markets whether variety improvement will pay off at the market level requires a more detailed examination of the relative worth of banana attributes within the structure of consumer preferences and production technologies related to bananas in uganda the results confirm the importance of consumption and production attributes in selling behavior quality and bunch size are found to be complements at the farm gate banana bunches that capture a premium at the market will be those that provide bundles of desirable consumption and production attributes simultaneously by revealing important price attribute relationships the findings provide guidance for crop improvement efforts and diversification choices while taking into account implicit market signals for output attributes

producer attitudes toward peanut market alternatives an application of multivariate probit joint estimation attitudes of peanut producers toward different market alternatives were analyzed assuming the absence of the government support program a multivariate probit joint estimation model for ungrouped data was utilized to ascertain profiles of producers favoring private treaty markets and proposed organized markets the joint estimation model allows for and measures correlation among market alternatives for greater accuracy in profile analysis the analysis suggests considerable support for all three of the proposed organized markets however choice of alternatives should be considered by a group of potential traders selected on the basis of the profile analysis

sales location among semi subsistence cassava farmers in benin a heteroskedastic double selection model in much of rural africa high transaction costs limit farmers market participation and thus their potential for income growth transaction costs can affect not only whether a farmer sells product but also whether sales occur at the farm gate or at a market if production behavior is related to a chosen sales location then analysis of interventions can be improved by explicit consideration of the decision of where to sell this article develops a double selection model that explains consumption and production decisions by semi subsistence farmers who first decide whether to be a seller and then whether to sell at the farm gate or at an off farm location before deciding on production and consumption the study tests the validity of this dual criteria model against a single criterion model in which a grower first decides to be a seller and then decides production consumption and sales location simultaneously the results suggest that the dual criteria model provides more information than the single criterion model using a sample of cassava producer in benin

cooperatives as entrants a potential shortcoming of game theoretic models in industrial organization is their failure to consider consumers as players we introduce a customer coalition a cooperative as a potential entrant and compare the cooperative entry threat with that posed by the usualforprofit entrant we identify four fundamental distinctions between cooperative andfor profit entrants and demonstrate that the strategic interplay between a cooperative and an incumbent firm may differ markedly from that between the incumbent and a for profit entrant the results impart a prospectively powerful role to potential cooperatives in beneficially regulating free market performance

the economics of roscas and intrahousehold resource allocation this paper investigates individual motives to participate in rotating savings and credit associations roscas detailed evidence from roscas in a kenyan slum nairobi suggests that most roscas are predominantly composed of women particularly those living in a couple and earning an independent income to explain this phenomenon we propose an argument based on conflictual interactions within the household participation in a rosca is a strategy a wife employs to protect her savings against claims by her husband for immediate consumption the empirical implications of the model are then tested using the data collected in kenya

selling at the farmgate or traveling to market using detailed survey data from uganda this article examines whether coffee producers sell to itinerant traders or directly to markets where they can get a higher price but must incur a transport cost we find that selling to the market is more likely when the quantity sold is large and the market is close by wealthy farmers are less likely to sell to the market possibly because the shadow value of their time is higher but if they have a large quantity of coffee for sale they are more likely to sell it to the market they are also more likely to travel to a distant market these findings are consistent with their better ability to pay for public transportation we find no evidence that the decision to sell at the farmgate is driven by a self control motive

risk aversion prudence and temperance a unified approach abstract risk aversion can be defined either by the negative sign of the second derivative of the utility function or by the rejection of any mean preserving increase in risk the more recent notions of prudence and temperance have so far been defined exclusively by the sign of the third and the fourth derivative of the utility function in this paper we show that as risk aversion prudence and temperance can also be interpreted as systematic attitudes towards transformation of a density function

mixed risk aversion abstract we analyze the class of increasing utility functions exhibiting all derivatives of alternating sign this property that we call mixed risk aversion is satisfied by the utility functions most commonly used in financial economics the utility functions displaying mixed risk aversion can be expressed as mixtures of exponential functions we characterize stochastic dominance and we find conditions for both mutual aggravation and mutual amelioration of risks when agents are mixed risk averse finally the analysis of the distribution function describing a mixed utility allows one to characterize the behaviour of its indexes of risk aversion and to discuss its implications for portfolio selection journal of economic literature classification numbers d81 g11

fresh vegetable demand behaviour in an urban food desert food deserts are associated with lower quality diets and higher obesity rates one hypothesis for their emergence is that retailers avoid food deserts because demand side factors such as low income

on measuring the benefits of lower transport costs despite large amounts invested in rural roads in developing countries little is known about their benefits this paper derives an expression for the willingness to pay for a reduction in transport costs from the canonical agricultural household model and uses it to estimate the benefits of a hypothetical road project estimation is based on novel cross sectional data collected in a small region of madagascar with enormous yet plausibly exogenous variation in transport cost a road that essentially eliminated transport costs in the study area would boost the incomes of the remotest households those facing transport costs of about usd 75 ton by nearly half mostly by raising non farm earnings this benefit estimate is contrasted to one based on a hedonic approach

price transmission and trader entry in domestic commodity markets abstract using detailed data from three simultaneous surveys of producers traders and exporters this paper examines the transmission of international coffee prices through the domestic value chain in uganda we find that producer price fluctuations are inconsistent with constant transaction costs we investigate three possible explanations for this finding storage and contango marketing costs that increase with price and trader entry that raises search time we test and reject the storage and marketing costs explanation but we find some evidence of trader entry in response to a rise in export price our findings suggest that small itinerant traders enter in response to an export price increase probably taking advantage of farmers ignorance of the rise in wholesale price

linking smallholders to markets determinants and impacts of farmer collective action in kenya summary this article investigates determinants and impacts of cooperative organization using the example of smallholder banana farmers in kenya farmer groups are inclusive of the poor although wealthier households are more likely to join employing propensity score matching we find positive income effects for active group members yet price advantages of collective marketing are small and high value market potentials have not yet been tapped beyond prices farmer groups function as important catalysts for innovation adoption through promoting efficient information flows we discuss the conditions under which collective action is useful and through what mechanisms the potential benefits emerge

outside risk aversion and the comparative statics of increasing risk in quasi linear decision models necessary and sufficient conditions are derived to determine the effect of increases in rothschild stiglitz risk on optimal decisions in a class of competitive models with price uncertainty outside risk aversion and composite outside risk aversion are defined the effect of increased risk on the optimal decision is controlled by composite outside risk aversion it is decomposed into a wealth effect controlled by downside risk aversion and an uncertainty effect controlled by outside risk aversion composite outside risk aversion is shown to be equivalent to outside risk aversion so that the uncertainty effect controls the overall effect copyright 1995 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

cash crop production food price volatility and rural market integration in the third world large farmers in the third world often devote to cash crops a larger share of their land than do small farmers this paper suggests a possible explanation even in the presence of food markets third world farmers food security is best assured by food self sufficiency a model of crop portfolio choice under multivariate risk is used to show that reasonable assumptions regarding risk and preferences reproduce the observed pattern simulations further indicate that food market integration reduces the need for food self sufficiency policy implications are drawn regarding domestic trade liberalization and agricultural technology

optimal investment in transportation infrastructure when middlemen have market power a developing country analysis transportation costs and buyer market power reduce prices and income received by farmers in developing countries transportation costs directly affect the marketing margin and also exacerbate market power by limiting farmers access to buyers this article develops a multistage spatial model to determine optimal investment in transportation improvements taking account of impacts on marketing costs and competition the beneficial impact of investments from farmers perspective is mainly through enhanced competition meaning significant under investment may occur if this effect is ignored however the optimal investment depends on the relative importance of transportation costs in some settings transportation improvements reduce farm prices because buyers rationally over compensate farmers for these costs

almost marginal conditional stochastic dominance marginal conditional stochastic dominance mcsd developed by shalit and yitzhaki 1994 gives the conditions under which all risk averse individuals prefer to increase the share of one risky asset over another in a given portfolio in this paper we extend this concept to provide conditions under which most and not all risk averse investors behave in this way instead of stochastic dominance rules almost stochastic dominance is used to assess the superiority of one asset over another in a given portfolio switching from mcsd to almost mcsd amcsd helps to reconcile common practices in asset allocation and the decision rules supporting stochastic dominance relations a financial application is further provided to demonstrate that using amcsd can indeed improve investment efficiency

determinants of smallholder farmers participation in banana markets in central africa the role of transaction costs a bivariate probit model was employed to jointly and separately estimate banana market participation decisions of buying and selling households in rwanda and burundi using household survey data selectivity bias was corrected for estimating the transacted volumes using heckman s procedure the results showed that transaction cost related factors such as geographical location of households market information sources and travel time to the nearest urban center influence market participation non price related factors such as security of land tenure labor availability off farm income gender of the household head and years of farming experience had a significant influence on the transacted volumes output prices had a significant correlation with sales volume indicating price incentives increased supply by sellers generally the findings suggest that policies aimed at investments in rural road infrastructure market information systems collective marketing and value addition of banana products may provide a potential avenue for mitigating transaction costs and enhancing market participation and production of marketed surplus by rural households

capturing preferences for inequality aversion in decision support abstract we investigate the situation where there is interest in ranking distributions of income of wealth of health of service levels across a population in which individuals are considered preferentially indistinguishable and where there is some limited information about social preferences we use a natural dominance relation generalised lorenz dominance used in welfare comparisons in economic theory in some settings there may be additional information about preferences for example if there is policy statement that one distribution is preferred to another and any dominance relation should respect such preferences however characterising this sort of conditional dominance relation specifically dominance with respect to the set of all symmetric increasing quasiconcave functions in line with given preference information turns out to be computationally challenging this challenge comes about because through the assumption of symmetry any one preference statement i prefer giving 100 to jane and 110 to john over giving 150 to jane and 90 to john implies a large number of other preference statements i prefer giving 110 to jane and 100 to john over giving 150 to jane and 90 to john i prefer giving 100 to jane and 110 to john over giving 90 to jane and 150 to john we present theoretical results that help deal with these challenges and present tractable linear programming formulations for testing whether dominance holds between any given pair of distributions we also propose an interactive decision support procedure for ranking a given set of distributions and demonstrate its performance through computational testing

the influence of proximity to market on bean producer prices in nicaragua transport costs are an important determinant of smallholder welfare in developing countries in particular transport costs influence the prices that smallholders receive for their produce we propose a simple way of quantifying this influence taking the example of bean producers in nicaragua we employ a hedonic price model to estimate the effects of a smallholder s proximity to markets on the prices that he she receives while controlling for other factors such as the volume and quality of beans sold we find that on average each additional minute of travel time reduces farm gate prices by 2 5 cents per quintal based on these results the annual income from bean sales of the average smallholder in our sample would increase by between 24 and 110 usd if travel time to markets were reduced by 25 estimates of this nature can make an important contribution to cost benefit assessments of infrastructure investments

how is the liberalization of food markets progressing market integration and transaction costs in subsistence economies we propose a modification of baulch s parity bounds model to measure the market integration of food markets in developing countries instead of extrapolating a single observation of transaction costs we estimate transaction costs predicted transaction costs compare well with survey data of traders probabilities of market regimes computed on the basis of predicted transaction costs fluctuate significantly and do not support fixed regime probabilities over time the probability of market integration with trade decreases consistently during food shortages increasing either the probability of no trade or loss making trade or the probability of profitable but unexploited trade opportunities the data further support a negative trend in market integration with trade

trains trade and transaction costs how does domestic trade by rail affect market prices of malawi agricultural commodities this paper measures the impact of low cost transport by rail in malawi on the dispersion of agricultural commodities prices across markets by exploiting the quasi experimental design of the nearly total collapse of domestic transport by rail in january 2003 due to the destruction of a railway bridge at rivirivi balaka estimations are based on monthly market prices of four agricultural commodities maize groundnuts rice and beans in 27 local markets for the period 1998 2006 market pairs connected by rail when the railway line was operational are intervention observations railway transport services explain a 14 percent to 17 percent reduction in price dispersion across markets geographical reach of trade varies by crop most likely related to storability and geographical spread of production perishability appears to increase impact reflecting limited scope for arbitrage overall impacts are remarkably similar in size across commodities

decision making under uncertainty when preference information is incomplete we consider the problem of optimal decision making under uncertainty but assume that the decision maker s utility function is not completely known instead we consider all the utilities that meet some criteria such as preferring certain lotteries over other lotteries and being risk averse s shaped or prudent these criteria extend the ones used in the first and second order stochastic dominance framework we then give tractable formulations for such decision making problems we formulate them as robust utility maximization problems as optimization problems with stochastic dominance constraints and as robust certainty equivalent maximization problems we use a portfolio allocation problem to illustrate our results this paper was accepted by dimitris bertsimas optimization

minimizing risk exposure when the choice of a risk measure is ambiguous since the financial crisis of 2007 2009 there has been a renewed interest in quantifying more appropriately the risks involved in financial positions popular risk measures such as variance and value at risk have been found inadequate because we now give more importance to properties such as monotonicity convexity translation invariance positive homogeneity and law invariance unfortunately the challenge remains that it is unclear how to choose a risk measure that faithfully represents a decision maker s true risk attitude in this work we show that one can account precisely for neither more nor less than what we know of the risk preferences of an investor policy maker when comparing and optimizing financial positions we assume that the decision maker can commit to a subset of the above properties the use of a law invariant convex risk measure for example and that he can provide a series of assessments comparing pairs of potential risky payoffs given this information we propose to seek finan

putting risk in its proper place this paper examines preferences toward particular classes of lottery pairs we show how such concepts as prudence and temperance can be fully characterized by a preference relation over these lotteries if preferences are defined in an expected utility framework with differentiable utility the direction of preference for a particular class of lottery pairs is equivalent to signing the nth derivative of the utility function what makes our characterization appealing is its simplicity which seems particularly amenable to experimentation

farmer bargaining power and market information services in many sub saharan african countries farmers typically have a choice between selling their products to traders who travel between villages and markets and transporting their products to the nearest market themselves because of communities remoteness and poor communications with marketplaces farmers uncertainty about market prices is usually high traders may take advantage of farmers ignorance of the market price and extract a rent from them by offering very low prices for their products in this article we model bargaining interactions between farmers and traders meeting at the farmgate and we study how price information affects the bargain and the balance of power we show the conditions for market information services mis to be profitable for farmers and examine efficiency issues associated with asymmetric information finally we test the model s prediction that information results in positive individual gain for farmers using original survey data collected in the northern region of ghana specifically we estimate the causal effect of a mobile based mis program on farmers marketing performances and find that farmers who have benefited from the mis program received significantly higher prices for maize and groundnuts about 10 more for maize and 7 more for groundnuts than what they would have received had they not participated in the mis program these results suggest that the theoretical conditions for successful farmer use of mis may be met in the field

food deserts and the causes of nutritional inequality we study the causes of nutritional inequality why the wealthy eat more healthfully than the poor in the united states exploiting supermarket entry and household moves to healthier neighborhoods we reject that neighborhood environments contribute meaningfully to nutritional inequality we then estimate a structural model of grocery demand using a new instrument exploiting the combination of grocery retail chains differing presence across geographic markets with their differing comparative advantages across product groups counterfactual simulations show that exposing low income households to the same products and prices available to high income households reduces nutritional inequality by only about 10 while the remaining 90 is driven by differences in demand these findings counter the argument that policies to increase the supply of healthy groceries could play an important role in reducing nutritional inequality

proper prudence standard prudence and precautionary vulnerability abstract adding risks is an important area in decision making under uncertainty as it is rarely the case that people face only one single source of risk in this context pratt and zeckhauser econometrica 55 1987 143 kimball econometrica 61 1993 589 and gollier and pratt econometrica 64 1996 1109 define the concepts of proper risk aversion standard risk aversion and risk vulnerability in this paper we assume that the agent expects two independent risky incomes in the future and focus on his precautionary saving motive or equivalently consumption behavior at time zero this framework allows for a natural extension of the above papers and for the definition of new concepts that we call proper prudence standard prudence and precautionary vulnerability

imperfect competition in agricultural markets and the role of cooperatives a spatial analysis important characteristics of many agricultural markets are costly to transport raw products and relatively few processors one or more of which is often a cooperative this paper analyzes pricing behavior in these oligopsonistic spatial markets and focuses specifically upon the conjecture that cooperatives may have a procompetitive effect on the behavior of rival non co op processors the existence and magnitude of a procompetitive effect is shown to depend upon a number of structural and strategic factors including competitive relations among the non co op processors and a cooperative s membership and pricing policies

mobile money agricultural marketing and off farm income in uganda mobile money mm services can contribute to welfare gains in smallholder farm households previous research showed that one important pathway for these mm related welfare gains is through higher remittances received from relatives and friends here the role of other impact pathways is examined especially focusing on agricultural marketing and off farm economic activities the analysis builds on panel data from smallholder coffee farmers in uganda regression models show that the adoption of mm technology has contributed to higher household incomes and consumption levels off farm income gains are identified to be an important pathway also beyond remittances typical off farm income sources are small businesses in trade transport and handicrafts which benefit from novel savings and money transfer opportunities through mm in terms of agricultural marketing mm users sell a larger proportion of their coffee as shelled beans to buyers in high value markets instead of selling to local traders immediately after harvest mm services help to reduce cash constraints and facilitate transactions with buyers from outside local regions in conclusion mm can contribute to rural development through various important pathways analysis of adoption patterns suggests that mm services are socially inclusive

peasant household behaviour with missing markets some paradoxes explained a model of peasant household behavior under varying degrees of household specific food and labor market failures is constructed to show that these structural features can explain several well known patterns of peasant response which have often been attributed to peculiar motives presumed specific to peasants the model explains sluggish response to cash crops prices and high instability in perceived food and labor scarcities the key role of manufactured consumer goods prices in stimulating peasants effort in cash crops production the effectiveness of taxation as opposed to incentives in stimulating cash crops production and the key role of technological change in food production to enhance cash crop production results are obtained analytically in the case of one market failure and by numerical simulation with more than one

transactions costs and agricultural household supply response we develop and estimate a model of supply response when transactions costs create a situation where some producers buy others sell and others do not participate in markets we present two rationales for why producing households may have different relationships to the market proportional and fixed transactions costs using data on mexican corn producers we estimate an empirical model that allows for separate tests of the significance of both types of transactions costs revealing that both fixed and proportional transactions costs matter for the estimation the results provide consistent estimates of supply elasticity and measures of the relative importance of factors determining both proportional and fixed transactions costs

risk lovers and the rent over investment puzzle in this paper we prove existence and uniqueness of equilibrium in a rent seeking contest given a class of heterogeneous risk loving players we explore the role third order risk attitude plays in equilibrium and find that imprudence is sufficient for risk lovers to increase rent seeking investment above the risk neutral outcome moreover we show that rent can be fully dissipated in a standard tullock contest played by a large number of risk lovers

demand elasticities for fresh fruit at the retail level the obesity epidemic in the us and elsewhere has re doubled efforts to understand determinants of the quality of consumers diets part of the discussion has centered on the potential of fat taxes and or the subsidization of the purchase of fresh fruits and vegetables to coax consumers to better diets whether this discussion has merit or not fundamental to the debate are the demand elasticities of the commodities involved this study employs weekly data from several retail stores on fruit prices and sales to estimate elasticities of individual fruits estimates show consumers are more responsive to price than has been found previously

preservation of more risk averse under expectations abstract the preservation of risk aversion properties of utility functions under expectation operations is of interest in the study of derived utility functions in sequential decision problems and in problems with multiple contemporaneous sources of uncertainty the purpose of this note is to present sufficient conditions for the pratt relation more risk averse to be preserved under expectations

the role of inventory in delivery time competition the paper operationalizes the notion of shortage cost by considering the behavior of customers and competing firms and examines the role of inventory in response time competition we start with a single firm production control model in which customers are characterized by their preferences of price quality and delivery time the optimal production inventory policy and the optimal choice between make to order and make to stock operations are determined in simple newsboy like formulas the basic model is then extended to an n firm market game in which firms compete for orders from the aspect of early delivery one could think of this setting as an oligopoly racing market the analysis shows that competition can breed a demand for produce to stock just as other economic phenomena such as economies of scale uncertainty or seasonality can induce make to stock and that delivery time competition increases the buyer s welfare while decreasing the producer s welfare

pricing production scheduling and delivery time competition this paper studies competition between firms that produce goods or services for customers sensitive to delay time firms compete by setting prices and production rates for each type of customer and by choosing scheduling policies the existence of a competitive equilibrium is proved the competitive equilibrium is well defined whether or not a firm can differentiate between customers based upon physical characteristics because each customer has incentive to truthfully reveal its delay cost further insights are derived in two special cases a unique equilibrium exists for each of the cases in the first case firms are differentiated by cost mean processing time and processing time variability but customers are homogeneous the conclusions include that a faster lower variability and lower cost firm always has a larger market share higher capacity utilization and higher profits however this firm may have higher prices and faster delivery time or lower prices and longer delivery time in the second

portfolio choice based on third degree stochastic dominance we develop an optimization method for constructing investment portfolios that dominate a given benchmark portfolio in terms of third degree stochastic dominance our approach relies on the properties of the semivariance function a refinement of an existing superconvex dominance condition and quadratic constrained programming we apply our method to historical stock market data using an industry momentum strategy our enhanced portfolio generates important performance improvements compared with alternatives based on mean variance dominance and second degree stochastic dominance relative to the center for research in security prices all share index our portfolio increases average out of sample return by almost seven percentage points per annum without incurring more downside risk using quarterly rebalancing and without short selling this paper was accepted by lauren cohen finance

the impact of coffee price changes on rural households in uganda employing household survey data covering the periods 1992 1993 1995 1996 and 1999 2000 this article shows for the case of uganda that a coffee market liberalization followed by a price boom was associated with substantial reductions in poverty which could even be sustained when prices went down again coffee is not planted by the richest farmers and the gains from higher coffee prices accrued to poorer and richer coffee farmers alike nor were poorer farmers hurt disproportionately when prices fell in addition we find strong spillovers from coffee production to other agriculture which tends to favor the poor and to nonagricultural activities these multiplier effects are concentrated in coffee regions in an economic environment characterized by a booming agricultural sector coffee farmers were able to accommodate the negative price shock in particular through agricultural diversification general agricultural growth also cushioned possible negative multiplier effects in coffee regions overall the case of coffee in uganda thus lends support to the view that agricultural trade liberalization is beneficial for the poor

managerial motivation dynamics and incentives firms can increase profitability by appropriately motivating managers we investigate drivers of managerial motivation and propose how firms can use performance pay to alter motivational patterns we focus on the agent s optimal effort decision in trading off compensation utility with effort cost in a static and dynamic setting surprisingly we find that lower risk aversion or increased pay are not necessarily motivating factors and identify the relevant effort drivers underlying the agent s utility and compensation plan we characterize properties of agents preferences for output lotteries risk aversion aggressiveness prudence that trigger systematic motivational patterns with respect to a variety of factors such as the agent s productivity and past performance time to evaluation the firm s capabilities and market factors our insights are robust holding under very general modeling assumptions on preferences rewards and the stochastic effort output function

transaction costs information technologies and the choice of marketplace among farmers in northern ghana using a transactions costs framework we examine the impact of information and communication technologies mobile phones and radios use on market participation in developing country agricultural markets using a novel transaction level data set of ghanaian farmers our analysis of the choice of markets by farmers suggests that market information from a broader range of markets may not always induce farmers to sell in more distant markets instead farmers may use broader market information to enhance their bargaining power in closer markets finally we find weak evidence on the impact of using mobile phones in attracting farm gate buyers

look who s talking the impacts of the intrahousehold allocation of mobile phones on agricultural prices abstract using data from the philippines we study the impact of mobile phones on the prices agricultural producers receive for their cash crop we first look at the impact on price of mobile phone ownership at the household level because this masks a considerable amount of heterogeneity we then look at the impact on price of the intrahousehold allocation of mobile phones we find that whether the household owns a mobile phone has no impact on price but whether a farmer or spouse owns a mobile phone is associated with a 5 to 8 per cent increase in price

market facilities and agricultural marketing evidence from tamil nadu india this article analyzes the effect of facilities and infrastructure available at the marketplace on a farmer s decision to sell at the market the econometric estimation shows that the likelihood of sales at the market increases significantly with an improvement in market facilities and a decrease in travel time from the village to the market the results suggest that wealth reduces a farmer s cost of accessing market facilities more than it increases her his opportunity cost of leisure the policy simulation indicates that the marginal benefits from an improvement in market facility will favor the poorer farmers in the context of india

optimal operating policies for multiplant stochastic manufacturing systems in a changing environment this paper addresses the horizontal coordination between production units located in different countries within a supply chain in a changing environment the model incorporates 1 congestion and delay through uncertainties in demand and processing times 2 a changing production cost environment through uncertainty in an environmental state such as the exchange rate and 3 allowing production to stock the main contribution of the paper is to characterize the optimal production policy assuming no switchover cost as a barrier type control policy for a series of models for each plant there is a barrier function defined on the environmental state that gives the total worldwide stock level barrier this plant should be operated if and only if the stock level is below this barrier the authors also show that in a simple setting of two plants in different countries the barrier functions are not always monotone in the exchange rate even when the production costs are the authors present a condition under which the control barriers are shown to be monotone under this condition and with only two plants it is optimal to follow a primary secondary plant policy in which given a fixed environmental state it is optimal to operate both plants when stock is low only the primary plant when stock is moderate and neither when stock is high furthermore the roles of the plants switch as the environmental state passes through the equal production cost state in addition the firm seeks to carry the most stock as a hedge against future environmental state moves when one plant is significantly cheaper than the other the firm seeks to carry the least stock when both plants are equally costly to operate

assessing the impact of improved retail access on diet in a food desert a preliminary report if poor food retail access in deprived areas of british cities is linked as suggested in many of the policy debates of the late 1990s via compromised diets undernutrition to poor health and widening health inequalities what is the impact of a sudden and significant improvement in food retail access likely to be on the food consumption patterns of residents in this paper we describe and provide preliminary results from the first ever uk study of a major retail provision on diet in a food desert a before after study of food consumption patterns in the highly deprived previously poor food retail access area of seacroft leeds experiencing a sudden and significant change in its food retail access as a result of the opening of a large superstore by the uk s leading food retailer we suggest that this study has the potential to provide some of the missing links between poor food retail access compromised diets undernutrition poor health and compound social exclusion that characterised statements on the topic of food deserts in the health inequalities and social exclusion debates of the late 1990s and that its findings may have significant implications for policy debate

supply side subsidies to improve food access and dietary outcomes evidence from the new markets tax credit in an effort to improve diet and health outcomes policymakers have increasingly turned to supply side subsidies aimed at encouraging investment by supermarkets and other food retailers in low income areas this article examines whether the us federal government s new markets tax credit nmtc has affected the entry of retail food establishments and in turn food shopping and purchasing patterns in low income communities to identify the impacts of the programme we take advantage of a discontinuity in nmtc funding generated by the formula used to determine the eligibility of census tracts for investment under the programme we find that the nmtc program has had modest but positive impacts on supermarket entry in low income communities based on household level scanner data there are no detectable effects on households food purchasing patterns in affected neighbourhoods at least in the short run

changes in background risk and risk taking behaviour economic decision making under uncertainty often takes place in the presence of multiple risks and in markets that are less than complete as a consequence choices about endogenous risks sometimes must be made while simultaneously facing one or more immutable exogenous background risks that are not under the control of the agent and that are independent of endogenous risks it is somehow natural to assume that an exogenous deterioration in background wealth will cause an individual to take more care elsewhere if we define a deterioration for example as making the individual poorer by removing a fixed amount of initial wealth we know from pratt 1964 that decreasing absolute risk aversion dara of an individual s von neumann morgenstern utility function yields this natural result if on the other hand background wealth becomes riskier due to the addition of a zero mean risk that is also statistically independent of all other risks behavior will be more risk averse if and only if preferences are risk vulnerable as defined by gollier and pratt 1996 risk vulnerability described below in section 4 is a stronger notion than dara and includes proper risk aversion pratt and zeckhauser 1987 and standard risk aversion eeckhoudt and kimball 1992 kimball 1993 as particular cases but a deterioration in background wealth may encompass more complicated distribution changes than the introduction of another statistically independent risk in this paper we examine background wealth deteriorations that take the form of both general firstand second degree stochastic dominance changes in risk fsd and ssd respectively in particular we determine conditions that are both necessary and sufficient for each of these two types of background risk changes to imply more risk averse behavior on the part of the individual for the case of fsd changes this condition turns out to be ross stronger characterization of decreasing absolute risk aversion in the case of general ssd changes in the distribution of background wealth the condition derived is a stronger version in ross sense of the conditions characterizing preferences that are locally risk vulnerable in the sense of gollier and pratt the necessary and sufficient conditions derived are fairly restrictive upon preferences however if we take as positive behavior that individuals act in a more risk averse manner whenever the distribution of background wealth deteriorates these conditions place canonical limits upon appropriate utility representations at the very least they

impacts of price and productivity changes on banana growing households in uganda this article compares the effects of changing market prices and farm productivity on the welfare of banana growing households in the ntungamo district of uganda a heterogeneous agent model is applied via a series of mathematical optimization problems to simulate production and consumption responses of 70 farm households surveyed in 2006 results show that a given increase in productivity has a greater impact on poverty alleviation than that same increase in market prices despite the effects of productivity gains being comparable across different types of household groups price improvements primarily benefit the incomes of households who are involved in rural producer organizations who are located closer to markets and who sell at the market

how accurate is food for work self targeting in the presence of imperfect factor markets evidence from ethiopia effective targeting of transfers is a key issue in public policy to combat poverty much faith is presently placed in self targeting mechanisms such as public employment schemes supported by food for work transfers where targeting errors have been observed these are usually attributed to mismanagement of key operational details such as the project s wage rate using a unique data set from rural ethiopia we demonstrate that targeting errors may also have structural causes in some low income countries we hypothesise that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self targeting public employment programmes rests our results confirm that the inaccuracy of ffw targeting stems from the fact that in rural ethiopia higher income households are endowed with more labour per unit of land or animal due to poor factor markets in land and liv

preferred by all and preferred by most decision makers almost stochastic dominance while most decision makers may prefer one uncertain prospect over another stochastic dominance rules as well as other investment criteria will not reveal this preference due to some extreme utility functions in the case of even a very small violation of these rules such strict rules relate to all utility functions in a given class including extreme ones which presumably rarely represents investors preference in this paper we establish almost stochastic dominance asd rules which formally reveal a preference for most decision makers but not for all of them the asd rules reveal that choices which probably conform with most decision makers also solve some debates e g showing as practitioners claim an asd preference for a higher proportion of stocks in the portfolio as the investment horizon increases a conclusion which is not implied by the well known stochastic dominance rules

some stronger measures of risk aversion in the small and the large with applications the arrow pratt measures of risk aversion for von neumann morgenstern utility functions have become workhorses for analyzing problems in the microeconomics of uncertainty they have been used to characterize the qualitative properties of demand in insurance and asset markets to examine the properties of risk taking in taxation models and to study the interaction between risk and life cycle savings problems to name just a few applications equally importantly they have generated the linear risk tolerance class of utility functions which has provided canonical examples in such diverse areas as portfolio theory and the theory of teams despite these successes there have been a number of areas for which the results have been weaker than hoped it is natural to use the risk aversion measures to compare the behavior of individuals in risky choice situations for example consider the individual portfolio choice problem in a two asset world with a riskless asset and a risky asset if individual a has a uniformly higher arrow pratt coefficient of risk aversion than individual b then b will always choose a portfolio combination with more wealth invested in the risky asset but suppose that both assets are risky now there is no obvious sense in which the more risk averse individual can be said to hold a less risky portfolio but it seems strange that such a simple alteration should destroy the analytics which support the basic intuition similarly consider the basic insurance problem if one individual a is more risk averse than another b in the arrow pratt sense it follows that a will pay a larger premium to insure against a random loss than will b typically though an individual evaluates partial rather than total insurance that is only some gambles can be insured against and others must be retained in this case even when the gambles which are retained are independent from those which are insured it is no longer true that the individual whose arrow pratt measure of risk aversion is higher will pay a larger insurance premium the situation is no better when we consider comparative statics exercises for a single individual decreasing absolute risk aversion in the sense of arrow and

the formation of cooperatives a game theoretic approach with implications for cooperative finance decision making and stability this paper departs from the traditional organization oriented approach to cooperative analysis it exploits cooperation s functional similarity to vertical integration to examine individuals incentives to form cooperatives a model of formation of a purchasing cooperative is presented and developed as an n person game with the core as a solution concept core existence is examined for both single and multiple cooperative configurations and cooperative finance methods are examined relative to finding core compatible allocation rules the results provide insight into a cooperative s equilibrium output stability decision making financing methods and choice of open or restricted membership

how much more do growers receive for fair trade organic coffee abstract i use a representative sample of coffee growing households in southern mexico to estimate the price premium and gross income gain from participating in fair trade organic markets through grower cooperatives for the 2004 2005 season ft organic growers received an average premium of 12 8 cents per pound yielding a gross income gain of 5 of total household income or about 26 dollars per household member the gain is net of the costs of cooperative participation but not of other costs incurred to become certified and suggests that price premiums alone have a limited potential to increase household returns from growing coffee more broadly speaking the finding raises questions about the persistence of substantial price premiums associated with social or environmental labeling initiatives

food standards certification and poverty among coffee farmers in uganda summary voluntary standards are gaining in importance in global markets for high value foods we analyze and compare impacts of three sustainability oriented standards fairtrade organic and utz on the livelihoods of smallholder coffee farmers in uganda using survey data and propensity score matching with multiple treatments we find that fairtrade certification increases household living standards by 30 and reduces the prevalence and depth of poverty for the other two certification schemes no significant impacts are found several factors that can explain differential impacts are discussed overly general statements about the effects of sustainability standards on smallholder livelihoods may be misleading

optimal operating policies in the presence of exchange rate variability we study the structure of the optimal policies for a firm operating plants in different countries the relative costs of production between the plants are assumed to vary over time due to economic and political factors such as exchange rates inflation taxes and tariffs based on the costs the firm can alter the quantity produced in each plant we determine the structure of the optimal policies for deciding when and by how much to alter the production quantities when the switch over costs are linear or step functions regardless of whether the variable production costs are concave or piece wise linear convex and regardless of whether the firm is supplying one or more markets the optimal policy is always a barrier policy the optimal barriers can be determined by using linear programming techniques and the optimal costs can be computed by solving a system of linear equations when the number of optimal barriers is two the optimal expected costs and the condition that determines the optimal barriers are explicitly derived

expected product market reforms and technology adoption by senegalese onion producers author s bernard t de janvry a mbaye s sadoulet e abstract the authors 2017 we assess the responsiveness of senegalese onion producers to their knowledge of expected changes in product market conditions whereby onions would no longer be sold based on volume but rather on weight and with labeling certifying quality a village level randomized information campaign on the upcoming introduction of these reforms induced significant investments by farmers into quality enhancing inputs delays in the actual introduction of scales enabled us to rigorously identify positive price effects from these investments our results point to the importance of farmers expectations regarding the improved functioning of product markets in triggering technology adoption

collective action for smallholder market access abstract the opportunity for smallholders to raise their incomes increasingly depends on their ability to compete in the market yet there are many failures in rural markets in developing countries that make it difficult for them to do this understanding how collective action can help address the inefficiencies coordination problems or barriers to market access is particularly important this paper draws on the case studies in this special issue and on other literature to examine the conceptual issues and empirical evidence on the role of collective action institutions in improving market access for the rural poor applying insights from studies of collective action in natural resource management the paper examines what conditions facilitate effective producer organizations for smallholders market access with special attention to the characteristics of user groups institutional arrangements types of products staples perishables and other commodities markets local domestic and international and external environment the paper also identifies policies and interventions that facilitate collective action for market access among smallholders and examines whether the public sector private sector and or civil society is best positioned to provide such interventions

a note on almost stochastic dominance abstract both the expected utility maximization and the hierarchy property are very important properties in stochastic dominance for almost stochastic dominance leshno and levy 2002 propose a definition and tzeng et al 2013 modified it to give another definition this note provides more information on the two definitions the former has the hierarchy property but not the expected utility maximization whereas the latter has the expected utility maximization but not the hierarchy property

valuing operational flexibility under exchange rate risk in this paper we develop a stochastic dynamic programming formulation for the valuation of global manufacturing strategy options with switching costs overall we adopt a hierarchical approach first exchange rates are modeled as stochastic diffusion processes that exhibit intercountry correlation second the firm s global manufacturing strategy determines options for alternative product designs as well as supply chain network designs product options introduce international supply flexibility supply chain network options determine the firm s manufacturing flexibility through production capacity and supply chain network linkages third switching costs determine the cost of operational hedging i e the costs associated with reducing downside risks overall the firm maximizes its expected discounted global after tax value through the exercise of product and supply chain network options and or through exploitation of operational flexibility contingent on exchange rate realizations in this environment the firm must trade off fixed operating costs switching costs and the economic benefits derived from exploiting differentials in factor costs and corporate tax rates a multinomial approximation of correlated exchange rate processes is proposed that leads to a consistent and tractable lattice model for this compound option valuation problem we then demonstrate how the global manufacturing strategy planning model framework can be utilized to analyze financial and operational hedging strategies

credit market imperfections and the distribution of policy rents this article shows that credit market imperfections have important implications for the distribution of policy rents in a model with land as fixed factor and credit market imperfections when an area payment is given land rents go up by more than the subsidy on aggregate farms may lose from the subsidy the results depend on the extent to which subsidies have direct and indirect effects on the credit constraints on whether farms rent or own land and on farm heterogeneity

a selectivity model of household food marketing behavior in sub saharan africa the agricultural household s discrete decision of whether to participate in coarse grain markets is separated here from the continuous decision of how much to sell or buy conditional on participation failure to participate in markets results from high fixed transactions costs a selectivity model endogenously switches households into alternative market participation states correcting for bias caused by the exclusion of unobservable variables affecting both discrete and continuous decisions improved market information increases the probability of participation by sellers while access to cereals processing technology increases quantities transacted by both sellers and buyers conditional on participation

stochastic dominance analysis without the independence axiom we characterize the consistency of a large class of nonexpected utility preferences including mean variance preferences and prospect theory preferences with stochastic orders for example stochastic dominances of different degrees our characterization rests on a novel decision theoretic result that provides a behavioral interpretation of the set of all derivatives of the functional representing the decision maker s preferences as an illustration we consider in some detail prospect theory and choice acclimating preferences two popular models of reference dependence under risk and we show the incompatibility of loss aversion with prudence this paper was accepted by james smith decision analysis

an exogeneity test for a simultaneous equation tobit model with an application to labor supply a test of weak exogeneity in the simultaneous equation tobit model is proposed and illustrated using a female labour supply model estimated using cross section data the test statistic can be simply output from any standard tobit maximum likelihood package and is asymptotically efficient the procedure provides consistent estimators for the simultaneous tobit model whose asymptotic covariance matrix is a simple extension of the usual tobit formula we also provide the lagrange multiplier test of weak exogeneity this abstract was borrowed from another version of this item

increasing returns and market efficiency in agricultural trade abstract using detailed trader surveys in benin madagascar and malawi this paper investigates the presence of increasing returns in agricultural trade after analyzing margins costs and value added we find little evidence of returns to scale motorized transport is found more cost effective for large loads on longer distances but transporters appear to pool quantities from multiple traders margin rates show little relationship with transaction size personal travel costs are a source of increasing returns but the effect is small consequently total marketing costs are nearly proportional to transaction size working and network capital are key determinants of value added constant returns to scale in all accumulable factors working capital labor and network capital cannot be rejected this implies that policies to restrict entry into agricultural trade are neither necessary nor useful governments should focus instead on technological and institutional innovations to upgrade agricultural markets

changes in risk and the demand for saving abstract how does risk affect saving empirical work typically examines the effects of detectible differences in risk within the data how these differences affect saving in theoretical models depends on the metric one uses for risk for labor income risk second degree increases in risk require prudence to induce increased saving demand however prudence is not necessary for first degree risk increases and not sufficient for higher degree risk increases for increases in interest rate risk a precautionary effect and a substitution effect need to be compared this paper provides necessary and sufficient conditions on preferences for an n th degree change in risk to increase saving