the effect of financial repression and enforcement on entrepreneurship and economic development abstract a general equilibrium model with heterogeneous agents with respect to wealth and ability shows that differences across countries in intermediation costs and enforcement generate differences in occupational choice firm size credit output and income inequality counterfactual experiments are performed for latin american european transition and high growth asian countries with empirical estimates of each country s financial frictions and united states values for all other parameters the results isolate the quantitative effect of these financial frictions in explaining the performance gap between each country and the united states and depend critically on whether a general equilibrium factor price effect is operative

financial intermediary coalitions abstract in this article an environment in which the investment opportunities of agents are private information is studied and it is shown that financial intermediaries arise endogenously within that environment it is established that financial intermediaries are part of an efficient arrangement in the sense that they are needed to support the authors private information core allocations these intermediaries which are coalitions of agents exhibit the following characteristics in equilibrium they borrow from and lend to large groups of agents they produce information about investment projects and they issue claims that have different state contingent payoffs than claims issued by ultimate borrowers

lotteries insurance and star shaped utility functions abstract most agents insure against risks which entail large losses but few insure against small losses the fact that organized lotteries charge low ticket prices examplifies this spirit this weakly risk averse behavior pattern seems to be well structured but is at variance with concavity we derive axiomatically a class of utility functions star shaped which accommodate these phenomena concavity yields risk aversion everywhere and decreasing marginal utility star shaped utility functions exhibit risk aversion at some wealth positions and average utility from any of these is a decreasing function of wealth

a non expected utility model and its application in practical auctions this article presents a non expected utility decision model which is nonlinear in the winning probabilities the model not only explicitly expresses bidders attitudes to risk but also addresses t

agrifood grades and standards in the extended mercosur their role in the changing agrifood system is among the most important in terms of trade volumes in the developing world it contains global powerhouses of agroindustry and agriculture such as brazil ranked fourth worldwide and argentina and chile among the global frontrunners in meat and cereals and fruit respectively income growth and rapid urbanization are changing diets increasing the importance of processed foods and nonstaples as bennett s law predicts the most important nonstaples dairy vegetablesfruit meat and coffee have stringent export requirements with respect to g s in organization for economic cooperation and development oecd countries and mercosur domestic markets are themselves becoming more demanding in this regard the paper proceeds as follows section 2 presents definitions and theoretical hypotheses section 3 discusses policy and market determinants of changes in g s and highlights the importance of the emergence of privatized g s section 4 hypothesizes that the changes in g s are adding fuel to the forces of agrifood system concentration in the area section 5 concludes

financial intermediation and endogenous growth an endogenous growth model with multiple assets is developed agents who face random future liquidity needs accumulate capital and a liquid but unproductive asset the effects of introducing financial intermediation into this environment are considered conditions are provided under which the introduction of intermediaries shifts the composition of savings toward capital causing intermediation to be growth promoting in addition intermediaries generally reduce socially unnecessary capital liquidation again tending to promote growth

the determinants of an environmentally responsive firm an empirical approach abstract our empirical results indicate that a firm s formulation of an environmental plan is positively influenced by customer pressure shareholder pressure government regulatory pressure and neighborhood and community group pressure but negatively influenced by other lobby group pressure sources and a firm s sales to asset ratio firms which view environmental issues as important in the next 5 years are also more likely to have a plan relative to the manufacturing sector firms in the natural resource sector are more likely to formulate environmental plans while firms in the service sector are less likely to have plans our results provide insight into how firms react to environmental issues they also offer policymakers a list of determinants which can be used either as an alternative or complement to environmental regulation

private agri food standards implications for food policy and the agri food system abstract this paper provides a brief introduction to the evolution and nature of private food safety and quality standards highlighting the resultant impacts on the structure and modus operandi of supply chains for agricultural and food products and the challenges posed for processes of agricultural development it serves as an introduction to a series of papers that provide a comprehensive overview of the current state of knowledge regarding private food safety and quality standards in both an industrialised and developing country context in so doing it aims to provide a catalyst for further research on this rapidly evolving field of inquiry

the welfare implications of minimum quality standards previous analysis of the social welfare implications of minimum quality standards has yielded no decisive results in this paper the specific nature of consumer and producer responses to quality standards is incorporated into the analysis both consumer and producer gains are shown to be impossible when consumers can perceive quality before purchase even if low quality produce is diverted to secondary markets standards unambiguously reduce net social benefits the paper explores the possibility that minimum quality standards are a form of rent seeking behavior

the demand for food safety market imperfections and the role of government abstract this article reviews and comments upon a number of models of consumer choice of foods and diets with different real or perceived risks and benefits associated with them the article proceeds to discuss the imperfections and externalities in the market which result in a market solution which may provide too much or more typically too little food safety for individual consumers and for society the likely societal magnitudes of some of the costs of food borne ill health are also discussed the case for government intervention is quite clear but care must be taken not to impose too high a level of food safety

relative prices and investment rates abstract we construct a panel for the price of aggregate investment over consumption and report the following observations 1 relative price differences across countries are large over the entire sample period and this conclusion is not affected by excluding non tradable consumption goods 2 relative price dispersion has decreased during the sample period 3 relative price changes are not persistent across periods while average price levels are moreover the persistence in relative price levels is higher for countries at low relative prices we show that the relative price of investment is negatively correlated with investment rates in a cross section of countries the standard one sector growth model is a natural framework to study quantitatively the effects of barriers to capital accumulation since there is a very simple mapping between barriers to investment and relative prices in this environment we simulate a calibrated version of the model in which barriers follow a stochastic process common to all countries and estimated using relative price data and obtain statistics for investment rates that closely resemble what we observe in the data in particular the model accounts for 90 of the 1985 gini index of relative investment rates and the decline in investment rate dispersion over time the model has two limitations as a theory of development first it cannot account for the income disparity in the data unless we assume unmeasured capital with barriers affecting the broad measure of capital second even under these extreme assumptions the model cannot account for the evolution of income disparity over time

strategic use of private standards to enhance international competitiveness vegetable exports from kenya and elsewhere abstract the paper examines how european retailers are using private standards for food safety and quality as risk management and competitive tools and the strategic responses of leading kenyan and other developing country supplier exporters to such standards despite measures to harmonize a single market the european fresh produce market is very diverse in terms of consumer preferences structural dynamics and attention to and enforcement of food safety and other standards leading kenyan fresh produce suppliers have re positioned themselves at the high end including high care segments of the market precisely those that are most demanding in terms of quality assurance and food safety systems an array of factors have influenced this strategic positioning including relatively high international freight costs the emergence of more effective competition in mainstream product lines relatively low labor costs for produce preparation and strong market relationships with selected retail chains to succeed in this demanding market segment the industry has had to invest substantially in improved production and procurement systems upgraded pack house facilities and quality assurance food safety management systems

corporate strategy and international environmental policy this paper analyzes the interactions between international environmental policy and multinational corporate strategy the main contribution is building a new conceptual framework to analyze the type of corporate strategy developed in the presence of both national an international environmental regulations this framework distinguishes between firm level compliance with environmental obligations and the development of resource based green capabilities it also classifies major environmental regulations and incorporates a discussion of public policy

financial frictions occupational choice and economic inequality we develop a quantitative theory of entrepreneurship income inequality and nancial frictions disciplined with household data from brazil the theory extends lucas 1978 by modeling heterogeneity in two skills working and managerial skills consistently with the evidence the theory implies three occupational categories workers employers and self employed entrepreneurs we nd that the correlation between working and managerial skills matters importantly for the distribution of earnings across occupations and for the quantitative implications of nancial frictions we also nd

food standards are good for middle class farmers we estimate the causal effect of food standards on vietnamese pangasius farmers wellbeing measured by per capita consumption expenditure we estimate both the average effects and the local average treatment effects on poorer and richer farmers by instrumental variable quantile regression our results indicate that large returns can be accrued from food standards but only for the upper middle class farmers i e those between the 50 and 85 quantiles of the expenditure distribution overall our result points to an exclusionary impact of standards for the poorest farmers while the richest do not apply standards because the added gain is too small

optimal bidding in auctions from a game theory perspective abstract the game theoretic perspective in auction bidding has provided a powerful normative framework for the analysis of auctions and it has generated an impressive volume of research contributions tracing this research we review key recent advances which have greatly expanded our understanding of the operation of auctions and produced a more accurate analysis of mechanism design and optimal bidding we follow various experimental studies which have shown that the predictive power of auction theory remains in many cases limited for this reason we concentrate on research themes which enhance the applicability of auction theory leading to more realistic descriptions of bidding behaviors we identify important innovations which expand the environment of auction bidding and carry us beyond rational decision making we conclude providing directions of future research and discussing their implications

social imaginary and dilemmas of policy practice the food safety arena in japan through the string of food safety scares that has rocked japanese society since the early 2000s conflicts between the traditional notion of socially acceptable risk and the idea of a science based risk analysis approach have surfaced in the food safety arena elites including government officials and those members of scientific communities who support the science based risk analysis approach have become responsible for communicating seemingly contradictory ideas such as food in japan is safe and there is no such thing as zero risk with food this communication logjam has resulted in confusion and created public distrust of both government and scientific experts against this backdrop this paper aims to examine the struggles and challenges faced by government officials in explaining and practicing policies that pertain to highly controversial food safety issues the primary data used for illuminating the discourses is the official minutes of governmental committees including the agriculture forestry and fisheries committee and the consumer commission

risk aversion and overbidding in first price sealed bid auctions new experimental evidence bidding above the risk neutral nash equilibrium in first price sealed bid auctions has traditionally been ascribed to risk aversion later studies however offer other explanations and even argue that risk aversion plays no or a minor role in a novel experimental design we directly test the relationship between risk aversion and overbidding by systematically varying the distribution of risk attitudes in auction markets we find a significant relationship between our measure of risk aversion and overbidding jel d44 c91

firm productivity innovation and financial development acknowledgment we are grateful to christopher kilby saul lizondo chris papageorgiou the strategy policy and review departments low income countries group the africa department s macro modeling debt and growth network and two anonymous referees for useful comments and suggestions kersting gratefully acknowledges financial support by the center for global leadership at the villanova school of business 1 introductioneconomists still struggle to explain the large differences in output per worker across countries the view that these differences are mostly the result of variations in investment rates has now largely been abandoned as cross country evidence suggests that total factor productivity tfp rather than capital accumulation accounts for observed per capita income differences hall and jones 1999 the largely unexplained cross country differences in tfp led to prescott s 1998 call for a theory of tfp in response barriers to innovation imitation and adoption e g parente and prescott 2000 and institutions e g acemoglu and johnson 2005 have often been offered as explanations for low tfp in poorer countries the global crisis and the resulting uncertainty have reinforced concerns about growth prospects in many low income countries after a decade of almost universally solid growth performance the medium term outlook for many low income countries appears increasingly uncertain at the same time the growth potential in many countries with low tfp remains dim even beyond the full conclusion of this crisis if tfp drives growth its determinants are the key to development prospects in low income countries some country specific direct determinants of tfp geography history or institutions such as the prevalent legal system are fixed or slow moving and the degree to which policy can influence these conditions is limited others such as innovation or the level of financial development can respond to both foreign and domestic forces external shocks globalization or government policy in this view tfp is not primarily the result of the endowment of a country but instead a direct result of purposeful actions by economic agents and as such can be influenced by policy innovation activity leads to technological progress in two distinct ways purposeful research and development can result in the invention of completely new products and processes this kind of innovative activity moves the global technological frontier and still mainly occurs in developed countries however innovation also consists of the adoption and adaptation of existing technology which can close the gap between countries converging toward the global technological frontier and those on the leading edge pushing the world frontier innovation shares a strong connection with the provision of financial services invention and adoption of technology are costly and risky activities which require financing it is therefore natural to study the impact of a country s financial development on tfp via the innovation channel 1in this article we follow that agenda in two separate steps i how do firm specific actions in particular innovation affect firm productivity ii what is the role of a country s level of development both financial and general in facilitating higher productivity using firm level data taken from the enterprise surveys covering over 14 000 firms in 63 countries we first establish a connection between a firm s innovative activities and its productivity we control for country industry and firm specific factors the countries in our data include low middle and high income countries while the firms span all sizes with a focus on small and medium sized enterprises sme innovation is defined broadly as the introduction of new production processes or product lines so that it includes the adaptation of existing technology we find that other things being equal firms that have introduced a new process or product are more productive

which sectors make poor countries so unproductive which sectors are most responsible for the low total factor productivities of developing countries to answer this question we develop a new framework for sectoral development accounting applying this framework to the penn world table we find that in equipment construction and food the sectoral tfp differences between developing countries and the united states are much larger than in the aggregate however in manufactured consumption the sectoral tfp differences are about equal to the aggregate tfp differences and in services they are much smaller we show that our level of disaggregation allows us to reconcile the results of existing studies of sectoral productivity differences which have focused on noncomparable two sector decompositions of the aggregate data we also show that our results help shed light on existing theories of aggregate tfp differences

consumer willingness to pay to reduce the probability of retail foodborne pathogen contamination abstract the us department of agriculture applies a cost of illness approach to value reductions in morbidity which may understate the projected benefits from proposed food safety improvements by ignoring costs such as pain suffering and worry we use a national survey with a hypothetical food choice experiment to estimate a more comprehensive measure of consumer willingness to pay for food safety improvements our approach differs from previous evaluations of food safety improvements because we 1 provide the respondent with information about the promised change in the probability of pathogen contamination in retail food packages rather than changes in the probability of becoming ill 2 elicit changes in respondents subjective probability of becoming ill and 3 elicit predicted changes in the quantity demanded for products that have enhanced food safety properties we estimate the consumer s choice between a safety enhanced and an existing product the change in subjective probability of contracting foodborne illness associated with the enhanced product and the change in demand for the enhanced product in a manner that recognizes the correlation among unobserved elements the aggregated results suggest benefit estimates that are significantly larger than previous estimates for similar improvements

microeconomics of agricultural grading impacts on the marketing channel in this paper i focus on how grade prices affect the provision of product transformation skills in the food marketing system a self protection model is used to show how resources are allocated to protect the potential value of commodities in the marketing channel resource allocations may be complementary and complementarity may be exploited to expand an industry further uncertainty concerning skill levels may inhibit expansion because two primary objectives of agricultural extension involve facilitating skill acquisition and disseminating market information the model confirms roles for extension personnel the optimal location of transformation skills in a sequence of operations is also studied

benefits and costs of food safety regulation abstract this paper begins with a review of the concepts and methods that can be used to quantify the benefits and costs of food safety regulations on the cost side where research is only beginning to emerge this paper also provides an analytical framework for measurement of the costs of statutory regulations in the form of design and performance standards this paper also discusses the use and limitations of currently available benefit and cost information for quantitative regulatory impact assessment using the assessment of the mandatory haccp and pathogen reduction regulations in the united states as an example the paper concludes with suggestions for future research on quantifying benefits and costs of food safety regulations

toward a new conception of the environment competitiveness relationship accepting a fixed trade off between environmental regulation and competitiveness unnecessarily raises costs and slows down environmental progress studies finding high environmental compliance costs have traditionally focused on static cost impacts ignoring any offsetting productivity benefits from innovation they typically overestimated compliance costs neglected innovation offsets and disregarded the affected industry s initial competitiveness rather than simply adding to cost properly crafted environmental standards can trigger innovation offsets allowing companies to improve their resource productivity shifting the debate from pollution control to pollution prevention was a step forward it is now necessary to make the next step and focus on resource productivity

regulation and the law of torts tort law is private law regulation by statute is public law how should the two relate to each other in a regulatory state where statutory intervention in private markets is widespread both tort and statutory law have regulatory effects thus economic policymakers should examine the links between these legal regimes in substantive areas where both systems operate i argue in this paper that statutes should generally dominate so long as agencies can use rulemaking to shape policy common law torts should be limited to areas of activity not covered by statutes and to situations in which courts can complement the statutory scheme with a supplementary enforcement and compensation mechanism however if the implementation of a statutory scheme

from institutions to financial development and growth what are the links this paper presents an integrated overview of the literature linking institutions financial development and economic growth from the large body of research on institutional development the paper first selects those contributions that make it possible to study the role of institutional arrangements in ameliorating worsening the information frictions and transaction costs that characterize the development of financial markets the paper then investigates the theoretical mechanisms by which these specific frictions affect economic growth and presents the stock of empirical evidence quantifying the impact of institutions on growth through financial development

anticipated loser regret in third price auctions abstract losing the auction at an affordable price generates loser regret in third price auctions if bidders anticipate loser regret then in line with the experimental findings in a symmetric equilibrium the bids are more than the risk neutral nash equilibrium

subjective probabilities in games an application to the overbidding puzzle this article illustrates how the joint elicitation of subjective probabilities and preferences may help us understand behavior in games we conduct an experiment to test whether biased probabilistic beliefs may explain overbidding in first price auctions the experimental outcomes indicate that subjects underestimate their probability of winning the auction and indeed overbid when provided with feedback on the precision of their predictions subjects learn to make better predictions and to curb significantly overbidding the structural estimation of different behavioral models suggests that biased probabilistic beliefs are a driving force behind overbidding and that risk aversion plays a lesser role than previously believed

financing development the role of information costs to address how technological progress in nancial intermediation aects the economy a costly state veri cation framework is embedded into the standard growth model the framework has two novel ingredients first rms dier in the risk return combinations that they oer second the e cacy of monitoring depends upon the amount of resources invested in the activity a nancial theory of rm size results undeserving rms are over nanced deserving ones under funded technological advance in intermediation leads to more capital accumulation and a redirection of funds away from unproductive rms toward productive ones quantitative analysis suggests that nance is important for growth

methodologies and perspectives in research on labour relations in global agricultural production networks a review the integration of global south actors into the global agricultural economy has attracted research on labour effects this is because global south actors are often integrated at the level of produc

limited enforcement financial intermediation and economic development a quantitative assessment we present a model of economic development where the importance of financial differences caused by limited enforcement can be measured economies where enforcement is poor direct less capital to the production sector and employ less efficient technologies calibrated simulations reveal that the resulting effect on output is large furthermore the model correctly predicts that the average scale of production should rise with the quality of enforcement finally we find that the importance of limited enforcement rises with the importance of capital in production

co regulation as a possible model for food safety governance opportunities for public private partnerships public concern about food safety is placing increasing pressure on government agencies to be more prescriptive and proactive in their regulation of the food industry however given the scarcity of public sector resources concerns about the impact of regulation on competitiveness and the scale of the task at hand there is growing interest in co regulation with public and private sectors working hand in hand to deliver safer food at lower regulatory cost this paper explores the scope for the co regulation of food safety in the uk and north america where there are distinct differences in the established regulatory processes the authors conclude that opportunities clearly exist to varying degrees in the different countries analysed but that considerable obstacles remain to the widespread adoption of co regulatory practices in the area of food safety

disentangling demand enhancing and trade cost effects of maximum residue regulations maximum residue level mrl regulations in plant products can create unnecessary trade barriers on one hand and enhance demand via risk mitigation or quality assurance on the other we stipulate a generalized gravity equation model to disentangle the effects of mrls on the import demand and foreign exporters supply applying the framework to the mrls on pesticides imposed by high income organization for economic co operation and development countries we find that the mrls jointly enhance the import demand and hinder foreign exporters supply in addition exporters from the less and least developed countries are more constrained by the mrls than their competitors from the developed world jel f14 q17

food safety and urban food markets in vietnam the need for flexible and customized retail modernization policies access to safe and healthy food is a crucial element of food security in vietnam the safety of daily vegetables is of great concern to both consumers and policymakers to mitigate food safety risks the vietnamese government enforces rules and regulations and relies strongly on a single approach for organizing food provision being modernizing retail by replacing wet markets with supermarkets in general reorganizing food provision in this way is increasingly considered to be a guarantee for food safety especially in urban settings with growing populations to assess the effectiveness of this induced retail modernization of the fresh vegetables market in vietnam s capital hanoi this paper examines for whom and under which conditions does this approach deliver the desired outcomes the survey data and interviews show that ongoing retail modernization in hanoi reaches only a minor segment of the population and drives a large group of shoppers into informal vending structures on the basis of five case studies this paper demonstrates how similar supermarket interventions can yield contrasting outcomes when they do not accommodate for differences in shopper population and do not adapt to variations in the urban conditions to reduce exposure to unsafe food particularly for poorer segments of the population we conclude that developing a flexible portfolio of retail modernization pathways and adopting a reflexive policy approach provide better impact and leverage as opposed to the current trend of promoting supermarkets as a single ideal type form of food shopping

diversification into horticulture and poverty reduction a research agenda summary horticultural produce and processed products from the developing world are becoming increasingly popular both in domestic and in international markets global production and exports are rising steadily however yield increases have been smaller than area growth and have been negligible or even negative in the least developed countries while experience shows that horticulture can offer good opportunities for poverty reduction because it increases income and generates employment care must be taken that small and poor farmers are not excluded from the opportunities in these market sectors in this article we argue that development agencies must put more emphasis on horticultural research and development especially in the following priority areas genetic improvement safe production systems commercial seed production postharvest facilities and the urban peri urban environment

a theory of anticipated utility abstract a new theory of cardinal utility with an associated set of axioms is presented it is a generalization of the von neumann morgenstern expected utility theory which permits the analysis of phenomena associated with the distortion of subjective probability

ex post liability for harm vs ex ante safety regulation substitutes or complements this paper concerns the regulation of hazardous economic activities economists have generally viewed ex ante regulations safety standards pigouvian fees that regulate an activity before an accident occurs as substitutes for ex post policies exposure to tort liability for correcting extemalities this paper shows that where there is uncertainty there are inefficiencies associated with the exclusive use of negligence liability and that ex ante regulation can correct the inefficiencies in such a case it is efficient to set the safety standard below the level of precaution that would be called for if the standard were used alone jel 619

history lessons institutions factor endowments and paths of development in the new world the explanations offered for the contrasting records of long run growth and development among the societies of north and south america most often focus on institutions the traditional explanations for the sources of these differences in institutions typically highlight the significance of national heritage or religion we in contrast argue that a hemispheric perspective across the wide range of colonies established in the new world by the europeans suggests that although there were many influences factor endowments or initial conditions had profound and enduring effects on the long run paths of institutional and economic development followed by the respective economies

financial development growth and the distribution of income a paradigm is presented in which both the extent of financial intermediation and the rate of economic growth are endogenously determined financial intermediation promotes growth because it allows a higher rate of return to be earned on capital and growth in turn provides the means to implement costly financial structures thus financial intermediation and economic growth are inextricably linked in accord with the goldsmith mckinnon shaw view on economic development the model also generates a development cycle reminiscent of the kuznet hypothesis in particular in the transition from a primitive slow growing economy to a developed fast growing one a nation passes through a stage in which the distribution of wealth across the rich and poor widens

optimal sharing of foodborne illness prevention between consumers and industry the effect of regulation and liability consumers and the food industry can both prevent foodborne illness two questions are explored what is the socially optimal level of preventative effort by each and can tort and regulatory instruments induce such behavior analysis is complicated by two aspects of food safety technology one party s effort can affect the marginal effectiveness of the other party s effort and damage functions can be nonconvex previous analysis of accidents under torts and regulation fails to consider these generalizations indeed results concerning the ability of tort and regulatory instruments to induce first best and second best behavior often contradict previous results in the literature

shared quality uncertainty and the introduction of indeterminate goods the purpose of this paper is to introduce a new category of goods indeterminate goods which will be compared with the classical framework of experience search and credence goods nelson 1970 darby and karni 1973 this concept sheds new light on the nature and status of quality uncertainty through the following hypothesis uncertainty about the product s quality can be shared by all agents of the market and this uncertainty can be non neutral and disrupt the market we identify three types of shared uncertainty about the product s characteristics and the corresponding problems that can arise shared uncertainty due to the emergence of a product hirschman 1974 shared uncertainty concerning the past of a product basing ourselves on the art market and finally shared uncertainty regarding the future impacts of a product through empirical data on product safety

trade standards and poverty evidence from senegal summary in the debate on trade and poverty it is argued that standards act as trade barriers and cause marginalization of the poor this paper quantifies income and poverty effects of high standards trade and integrates labor market effects by using company and household survey data from the vegetable export chain in senegal we find that exports grew sharply despite increasing standards contributing importantly to rural incomes and poverty reduction tightening standards induced a shift from smallholder contract farming to integrated estate production altering the mechanism through which poor households benefit through labor markets instead of product markets

pareto optima and competitive equilibria with adverse selection and moral hazard this paper explores the extent to which standard general equilibrium analysis of pareto optima and of competitive equilibria can be applied to environments with moral hazard and adverse selection problems allowing for lotteries contracts with random components we first establish that an adverse selection insurance economy a moral hazard insurance economy a signaling economy and a private information labor market economy are all special cases of a simple general structure we then show that techniques for characterizing pareto optimal contracts as solutions to concave programming problems are useful and nice and appear to be broadly applicable allowing for lotteries we show how to characterize the optimal allocations for the adverse selection insurance and labor market economies we then show that standard existence and optimality theorems for competitive equilibria apply in the linear space containing lotteries if agents with characteristics which are distinct and privately observed at the time of initial trading enter the economy wide resource constraints in a homogeneous way other kinds of diversity are not critical for economies with moral hazard which satisfy the homogeneity condition competitive contract markets single out a subset of the optima and thus can be consistent with apparent unemployment and with a random allocation of labor supplied though all households are averse to risk the adverse selection insurance and signaling economies however do not satisfy the homogeneity condition and are difficult to decentralize efficiently with a price system

asymmetry in first price auctions with affiliated private values collusion and heterogeneity across firms may introduce asymmetry in bidding games a major difficulty in asymmetric auctions is that the bayesian nash equilibrium strategies are solutions of an intractable system of differential equations we propose a simple method for estimating asymmetric first price auctions with affiliated private values considering two types of bidders we show that these differential equations can be rewritten using the observed bid distribution we establish the identification of the model characterize its theoretical restrictions and propose a two step non parametric estimation procedure for estimating the private value distributions an empirical analysis of joint bidding in ocs auctions is provided copyright 2003 john wiley sons ltd

barriers to entry and development we ask whether barriers to entry are a quantitatively important reason for the income gap between developing countries and the united states we develop a tractable general equilibrium model that captures the effects of barriers to entry and the other main distortions typically considered in the development literature we carry our model to the data and ask it to match the main development facts from the penn world table we find that this requires large barriers to entry in developing countries which account for about half of the income gap with the united states

nonlinear behavior in sealed bid first price auctions the extent to which the behavior of people is consistent with game theoretic principles is investigated in a first price sealed bid auction environment three linear rules of thumb with increasing complexity are used as benchmarks to gauge the accuracy of the constant relative risk aversion model crram in addition the crram is tested against the relaxation of the rational expectation hypothesis existing competitive bidding experiments cannot clearly distinguish between game theoretic models and linear markdown rules on an individual level within the parametric environments studied and reported in the experimental literature game theoretic solutions are linear over the range of private values in which bid functions are estimated in this study agents drew values from non uniform distributions as a result the game theoretic bidding behavior is nonlinear due to the nonlinearity special econometric and numerical techniques are applied to solve the model and obtain the estimates the crram exhibits good fit of the data the pseudo r2 is greater than 0 8 in 90 percent of the subjects the crram is more accurate than the markdown model mm and the simple ad hoc model simam but not as accurate as the sophisticated ad hoc model sop am the data also supports the relaxation of the rational expectation hypothesis and suggests that substantial increases in the predictive power of game theoretic models can be gained from improvements in the theory of belief formation

the development of private fresh produce safety standards implications for developing mediterranean exporting countries integration into global markets offers the potential for more rapid growth and poverty reduction for poorer countries however market barriers within advanced economies to agricultural imports have made it harder for developing countries to take full advantage of this opportunity this article examines the impact of increasing demands for food safety and quality by european food retailers and how the fundamental structure and culture of supplier organisations required by european retail chains are a major entry barrier for developing mediterranean fresh produce exporting countries and for developing countries in general the long term solution for such countries to sustain an international demand for their products lies in structural strategic and procedural initiatives that build up the trust and confidence of importers retailers in the quality and safety assurance mechanisms for their produce

determinants of retailers decisions to use public or private grades and standards evidence from the fresh produce market of sao paulo brazil abstract this paper models retailers choices between public and private grades and standards g s and their means of administering them it focuses on the firm specific factors influencing the decision increasing use of private g s worldwide particularly by large powerful retail chains has implications for competition participation and the effectiveness and efficiency of public policy regarding g s drawing from a study of fresh produce markets in sao paulo brazil the paper shows that the importance of the product in the firm s activities or sales market power scale of operations and investment in brand capital and reputation are key firm specific factors encouraging the use of private g s regimes over public important contextual determinants are the strategic objective of the standard the institutional environment and the characteristics of the product and market a range of formal and informal private and public methods for administering g s was found the paper discusses policy implications of the results focusing on issues of substitutability and complementarity between public and private g s regimes

risk aversion in the theory of expected utility with rank dependent probabilities expected utility with rank dependent probability theory is a model of decision making under risk where the preference relations on the set of probability distributions is represented by the mathematical expectation of a utility function with respect to a transformation of the probability distributions on the set of outcomes this paper defines based on g teaux differentiability measures of risk aversion for such preferences which characterize the relation more risk averse and applies these measures to the analysis of unconditional and conditional portfolio choice problems

experimental development of sealed bid auction theory calibrating controls for risk aversion we offer a brief survey of bidding theory in high price auctions of experimental studies of behavior in such auctions and of the interplay between the design and results of the experiments and efforts to further develop the theory two new series of experiments are reported the first applies a convex transformation of payoffs in an attempt to induce a lowering of subject bids as if the bidders had become less risk averse the second applies a method for inducing any prespecified utility function for risky choices on an individual we use it to induce as if risk neutral behavior both series use baseline control to calibrate the hypothesized effect of the procedures on riskaverse behavior

the unintended consequence of an export ban evidence from benin s shrimp sector summary the inability of benin to comply with eu standards led to a ban on its shrimp exports we show that the ban had a negative impact on the income of fishmongers and fishermen in the short run but also several years after it was lifted the impact persisted because exports to the eu did not revive and the local shrimp demand could not fully compensate for the loss of the eu market a small number of local actors coped with the ban by moving out of the sector but the large majority were locked in the local fishery sector

finding missing markets and a disturbing epilogue evidence from an export crop adoption and marketing intervention in kenya in much of the developing world many farmers grow crops for local or personal consumption despite export options that appear to be more profitable thus many conjecture that one or several markets are missing this paper reports on a randomized controlled trial conducted by drumnet in kenya that attempts to help farmers adopt and market export crops drumnet provides smallholder farmers with information about how to switch to export crops makes in kind loans for the purchase of the agricultural inputs and provides marketing services by facilitating the transaction with exporters the experimental evaluation design randomly assigns pre existing farmer self help groups to one of three groups 1 a treatment group that receives all drumnet services 2 a treatment group that receives all drumnet services except credit or 3 a control group after one year drumnet services led to an increase in production of export oriented crops and lower marketing costs this translated into household income gains for new adopters however one year after the study ended the exporter refused to continue buying the cash crops from the farmers because the conditions of the farms did not satisfy european export requirements drumnet collapsed in this region as farmers were forced to sell to middlemen and defaulted on their loans the risk of such events may explain at least partly why many seemingly more profitable export crops are not adopted

linking smallholder farmers to markets on extensive and intensive margins evidence from nicaragua abstract access to modern commercialization channels is key for smallholder farmers to move away from subsistence farming and overcome poverty however achieving that goal is challenging for smallholders given their lack of appropriate managerial practices production technology and infrastructure this paper examines the association between receiving trainings in two distinct entrepreneurial practices one direct at the individual and farmer association level and another indirect at the community level and commercialization in non local markets at the extensive and intensive margins we exploit a panel dataset of bean producers in nicaragua that participated in an ngo program implemented between 2007 and 2012 we find opposite results for the two market linkage activities especially on the intensive margin or volume of sales while reciving direct training on entrepreneurial practices ep is positively associated with commercialization training on municipality engagement me activities is negatively associated these correlation patterns are mainly observed among entrant farmers as opposed to those already participating in commercial markets prior to the program implementation we also find varying results for me activities by plot size and leadership position additional estimations show that training activities that are positively correlated with bean commercialization are not necessarily correlated with the commercialization of other crops and vice versa

vested interests in a positive theory of stagnation and growth we study a positive theory of stagnation and growth aimed at understanding the large variations in growth outcomes across actual economies the theory points to the fundamental role played by vested interests in determining policies which are key to the growth process some agents seek to prevent the adoption of new technologies we develop a model of technology adoption and show how technological innovation may sow the seeds of its own destruction in particular we find that the equilibrium is characterized by a long cycle of stagnation and growth over this cycle incumbents are phased out of the economy will new innovation occur in formalizing our theory we make a methodological contribution by characterizing dynamic voting equilibria when voters must forecast the effects of different current policies on future prices and policy outcomes

agrifood industry transformation and small farmers in developing countries summary this article introduces this special issue on the rapid transformation of the agrifood industry in developing countries and its effects on small farmers we review the literature from the late 1980s to the present and find evidence first of food processing then retail transformation and mixed evidence of impacts on small farmers both inclusion particularly with resource providing contracts and exclusion sometimes from scale constraint sometimes from inadequate non land assets the special issue papers contribute to the debate by confirming the mix of cases of inclusion and exclusion the cases are main in horticulture and dairy key hopes for smallholder development

on finance as a theory of tfp cross industry productivity differences and economic rents we develop a theory of capital market imperfections to study how the ability to enforce contracts affects resource allocation across entrepreneurs of different productivities and across industries with different needs for external financing the theory implies that countries with a poor ability to enforce contracts are characterized by the use of inefficient technologies low aggregate tfp large differences in labor productivity across industries and large employment shares in industries with low productivity these implications are supported by the empirical evidence the theory also suggests that entrepreneurs have a vested interest in maintaining a status quo with low enforcement

food safety regulation an overview of contemporary issues abstract this article discusses a number of issues that are influencing the evolution of food safety regulation in developed and to a lesser extent developing countries whilst not definitive it aims to highlight those factors which are considered crucial to an understanding of contemporary food safety controls in both the public and private spheres these issues include criteria applied to assess the need justification for food safety regulation relationships between public and private food safety control systems alternative forms that public food safety regulation can take strategic responses to food safety regulation and the trade implications of national food safety controls the article serves as an introduction to these issues which are discussed at greater length in the other papers that make up this special issue of food policy

risk attitudes in first price auction experiments a bayesian analysis non cooperative bidding theory for sealed bid auctions generally implies testable predictions that are conditioned on the risk attitudes of agents received laboratory experiments that purport to test this theory do not generally control for the risk attitudes of subjects those experiments exhibit behavior inconsistent with popular bidding models that assume that agents have the same aversion to risk or are all risk neutral this paper constructs an explicit bayesian prior distribution for the risk attitudes of experimental subjects and reconsiders the experimental results it finds that observed bidding behavior is still inconsistent with the nash predictions when explicit prior weights are attached to alternative assumptions about subject risk attitudes thus one cannot account for observed bidding anomalies by appealing to uncontrolled nuisance variables such as risk attitudes non cooperative bidding theory for sealed bid auctions generally implies testable predictions that are conditioned on the risk attitudes of agents archetypical of this result is the nash equilibrium prediction for first price auctions for an object that is valued by agents in an independent and private manner received laboratory experiments that purport to test this theory do not generally control for the risk attitudes of subjects those experiments exhibit behavior inconsistent with popular bidding models that assume that agents have the same aversion to riskor are all risk neutral in this paper we construct an explicit prior distrlbution for the risk attitudes of experimental subjects and reconsider the experimental results we find that observed bidding behavior is indeed consistent with the nash predictions when explicit prior weights are attached to alternative assumptions about subject risk aversion however when one allows for risk loving subjects as well observed behavior is inconsistent with nash predictions thus one cannot account for observed bidding anomalies by appealing to uncontrolled nuisance variables such as risk attitudes in section i we consider a specific nash equilibrium ne bidding model due to cox roberson and smith 1982 and cox smith and walker 1988 that clearly illustrates the risk sensitivity of the theoretical predictions in section ii we provide independent evidence of the risk attitudes of experimental subjects in a test for risk attitudes developed by harrison 1986a this evidence allows us to construct an explicit prior probability density function over the coefficient of constant relative risk attitudes employed in the specific bidding model of section i in section iii we reconsider the evidence from the first price fp experiments reported in cox roberson and smith 1982 and cox smith and walker 1983a 1983b i a specific bidding model cox roberson and smith 1982 hereafter crs present a model based on a power function utility specification for agent i ui y y 1 received for publication august 31 1987 revision accepted for publication december 18 1989 university of south carolina i am grateful to two anonymous referees for helpful comments although they are not responsible for my conclusions

star shaped probability weighting functions and overbidding in first price auctions there is a debate about whether risk aversion is the main source of overbidding in a first price independent private values auction as an alternative we adopt a non expected utility framework and identify an interpretable property on the probability weighting function which always induces overbidding

understanding developing country strategic responses to the enhancement of food safety standards this paper explores the competing concepts of standards as barriers and standards as catalysts in the context of food safety standards in international trade in agricultural and food products through a review of existing evidence of the impact of food safety standards on developing country exports of agricultural and food products and the results of a series of country and product specific case studies it is suggested that food safety standards can act as both a barrier to trade and the basis of competitive positioning for developing countries in international markets this suggests that broad conclusions about the trade effects of food safety standards on developing countries are problematic rather the level and ways in which agricultural and food exports are impacted can be product country standard and even firm specific

investor protection optimal incentives and economic growth does investor protection foster economic growth to assess the widely held affirmative view we introduce investor protection into a standard overlapping generations model of capital accumulation better investor protection implies better risk sharing because of entrepreneurs risk aversion this results in a larger demand for capital this is the demand effect a second effect the supply effect follows from general equilibrium restrictions better protection i e higher demand increases the interest rate and lowers the income of entrepreneurs decreasing current savings and next period s supply of capital the supply effect is stronger the tighter are the restrictions on capital flows our model thus predicts that the positive effect of investor protection on growth is stronger for countries with lower restrictions cross country data provide support for this prediction as does the detailed examination of the growth experiences of south korea and india

influence of neighbor experience and exit on small farmer market participation this research analyzes the motivations and dynamics of small farmer participation in supermarket supply chains in developing countries why some small farmers join these new markets and continue their participation why others drop out or decline the relationship from the outset drawing on insights from the technology adoption literature on learning and experimentation and also on findings from a simple two period bayesian model of farmer decisions to participate in a new market we incorporate measures of neighboring farmers experience into the decision model results suggest that farmers delay entry to observe their neighbors outcomes we find a negative relationship between the number of neighbor participants in a given period and a farmer s own decision to enter the supply chain we find evidence that farmers delay entry for strategic reasons allowing neighbors to bear the costs associated with a first wave of adjustment to the market including higher product rejection rates and lower initial annual transactions with supermarkets compared to revenues from marketing in the traditional way results are robust to definitions of neighbors using both administrative and geographic designations our results raise questions about the optimal sequence and level of farmers market participation and exit which remain largely unexplored in the literature

legal systems institutional environment and food safety in the aftermath of the recent food scares the united states and the united kingdom face major challenges to maintain a safe food system regulators on opposite sides of the atlantic are facing rapid product and process innovations changes in consumption behaviors expansion of international trade and discovery of new food hazards the u k and the u s demonstrate different approaches to manage safety risks this article will focus on two issues the reasons behind the differences in the american and english policy approaches to food safety and how these differences impact u s safety outcomes a comparative legal framework is provided to understand how food safety is elicited in the economy and the incentive implications of the different institutional settings these two different lenses because they differ so teach us about the fundamental sources of safety the u k s prevalent doctrine is parliamentary sovereignty and leads to a regulatory framework while the u s is based on constitutional supremacy and relies on a legal framework the source of safety under a regulatory framework is the government bureaucracy while the u s legal framework provides an important point of departure the constitutional standing of the firm and the consumer we argue that while the u k system is structured to work through a regulatory framework to enhance the supply of safety in the economy the u s system is much less directed the legal system the subject of this article plays an important role not only in discouraging breach but also in acting as a check on the discretionary authority of the regulator in the end the u s and the u k may have equally safe food systems but what differs is the fundamental source of the safety supply the practical implication is that safety in the food system emerges from several sources not just through regulation therefore direct importation of u k style regulatory approaches may not be effective within a u s constitutional setting

food safety issues and fresh food product exports from ldcs fresh food products have a high income elasticity of demand and few traditional trade barriers in high income markets as such they represent an important opportunity for less developed country ldc exporters fresh food product exports account for half of all food and agricultural exports from ldcs to high income countries but these products may be subject to greater food safety risks and potential trade barriers arising from sanitary regulation this paper reviews the challenges and issues facing ldcs in meeting food safety standards for export these issues include a the importance of fresh food product trade by region and the kinds of issues that arise from those products b the role of farm to table approaches and hazard analysis critical control points haccp in ensuring safety c the role of the public sector in ldcs in facilitating trade d the potential role of the sps agreement in resolving disputes and determining equivalency of standards between high and low income countries

haccp as an international trade standard the widening international use of hazard analysis critical control point haccp approaches by regulators and industry should facilitate trade of food products as countries and companies adopt roughly similar food safety assurance systems first and foremost however adoption of haccp principles is motivated by a desire to improve food safety particularly by the control of food borne pathogens in a manner that passes benefit cost or market tests for regulators trade facilitation is an important but often clearly secondary goal of haccp adoption that it is part of the goal set is due in part to recent trade agreements that seek to limit nontariff barriers to trade arising from food safety sanitary and phytosanitary regulations the pressure to reduce these barriers has led to a focus on haccp adoption as a vehicle for reconciling regulations across countries through various means of regulatory rapprochement this goal hierarchy with improved safety first and trade facilitation second is useful in explaining the likely operation of haccp as an international trade standard in the next decade 2