a risk responsive acreage response function for millet in niger abstract in this paper the impact of price risk on millet production in niger is investigated the hypothesis that farmers respond to output price risk is tested the results indicate that millet acreage planted decreased when millet price risk increased or when price risk of the competing crop decreased and therefore farmers do respond to changes in risk

price decontrol the microeconomic case for the big bang approach the paper presents the microeconomic case for rapid and comprehensive price decontrol as the appropriate first step in the transition to the market to make our point we consider the likely impact of the big bang price decontrol on a former socialist economy with particular attention to the welfare consequences for the consumer of eliminating shortages and queues the costs of monopoly power of state enterprises the possibility of major disruptions in the intermediate goods markets and the politico economic issues involved copyright 1991 by oxford university press

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

a century of research on agricultural markets this article provides a perspective on major innovations in research on agricultural markets over the past century we review research on market structure and performance vertical coordination arrangements and institutions for producer collective action contributions to empirical modeling of agricultural price determination and marketing margins are also evaluated as are innovations in research on spatial market relationships and the role of storage finally we discuss contributions to understanding market information systems and the functioning of market based mechanisms for agri

independent auditors bias and political agency abstract this paper analyzes political agency with endogenous information collection and revelation by third party auditors while increasing incentives for auditors to provide information straightforwardly improves political control a small amount of pro incumbent bias can also be useful for maintaining high levels of control when the equilibrium level of control is high most investigations uncover positive information about the incumbent since positive information increases reelection rates mildly pro incumbent auditors are willing to work harder than unbiased auditors in these equilibria for moderate levels of control pro incumbent auditors are again useful due to their extra effort even though they may suppress some negative information in equilibrium only when market incentives are low so equilibrium control is weak are unbiased or anti incumbent biased auditors better for voters than mildly pro incumbent auditors

risk response in the beef marketing channel a multivariate generalized arch m approach a model of the farm retail price spread for beef is specified under rational expectations in which systematic risk response on the part of marketing intermediaries is allowed the three equation structural model contains potentially time varying risk terms in margin and supply equations which i approximate and estimate using a multivariate garch in mean approach the estimated model is used to infer relative risk premia in beef margins and to simulate short run equilibrium risk effects results indicate that price risk has at times had substantial impacts on farm and retail beef prices and production

effects of agricultural market policy on crop production in china this paper investigates the effects of chinese market policy on crop production in the reform process after a brief review of the policy changes due to the reform the theoretical significance of chinese market policies for crop production is demonstrated diagrammatically it is shown that under the current market system the production of main crops is significantly influenced by both market and quota prices while relatively high quota reduces the influence of market prices on production relative price changes between competing crops will lead to shifting farmers cultivation preferences if inputs are constant empirical analysis based on cross section data for the period 1985 1997 from the province of zhejiang confirms these hypotheses the effects of policy variables however prove to be crop specific if the potential of crop production in china is to be better used an even more market oriented agricultural policy is required

new institutional economics in the post socialist transformation debate the paper suggests that there is a tension between the basic tenant of new institutional economics nie and the manner in which it has been applied in the debate on post socialist transformation this tension is explored in the context of four main perspectives on nie i property rights ii transaction costs economics iii new economic history and iv evolutionary economics there are two main arguments the first is that the transformation phase should be seen as open ended rather than a closed process where the pure market is the inevitable end result the second is that although the nie literature touches on most of the issues which are relevant to post socialist transformation the insights that it offers are still too general for policy guidance

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

a spatial theory of news consumption and electoral competition we characterize the optimal editorial positions of the media in a model in which the media influence both voting behaviour and party policies political parties are less likely to choose partisan policies when more voters consume informative news when there are two media outlets each should be slightly biased relative to its audience in order to attract voters with relatively extreme views voter welfare is typically higher under a duopoly than under a monopoly two media outlets under joint ownership may provide more diverse viewpoints than two independent ones but voter welfare is not always higher copyright 2008 wiley blackwell

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

the decline of township and village enterprises in china s economic transition summary a paradoxical phenomenon in china s transitional economy is that markets developed under predominant public ownership which nevertheless has declined with the development of markets previous studies reveal that initial political and economic conditions of reform and fiscal decentralization gave rise to local public enterprises leading role in early marketization this paper explains the subsequent fall of such a role building and expanding on recent studies of privatization we argue that market development and competition have constrained the abilities of local public enterprises to address revenue and employment imperatives whereas local governments sales oriented growth strategies have exacerbated governance problems panel data are analyzed to provide provisional test of pertinent hypotheses

a spatial theory of media slant and voter choice we develop a theory of media slant as a systematic filtering of political news that reduces multidimensional politics to the one dimensional space perceived by voters economic and political choices are interdependent in our theory expected electoral results influence economic choices and economic choices in turn influence voting behaviour in a two candidate election we show that media favouring the front runner will focus on issues unlikely to deliver a surprise while media favouring the underdog will gamble for resurrection we characterize the socially optimal slant and show that it coincides with the one favoured by the underdog under a variety of circumstances balanced media giving each issue equal coverage may be worse for voters than partisan media

state governance evolution in resource rich transition economies an application to russia and kazakhstan following a decade of transition in the former soviet union fsu governance of the oil and gas sectors has evolved to economic nationalism in the newly independent states this has manifested itself through greater direct state ownership or participation in oil and gas production at the expense of both domestic in the case of russia and international oil companies as well as legislative developments that increase the flow of oil and gas value to the state here we analyse some of the dynamics giving rise to economic nationalism within a model of a state capacity and the ability to implement policy and extract value our analysis is based on the institutional and economic functioning of the oil and gas sector we analyse a vector of institutions and examine production sharing agreements and national oil companies

manipulated news model electoral competition and mass media abstract this paper investigates the relationship between media manipulation the strategic suppression of relevant information by mass media and self mediatization the strategic exploitation of media coverage by candidates in elections in the model a voter cannot directly observe the policies proposed by two office motivated candidates the voter learns this information through media reports before voting takes place while the media outlet suppresses some of this information because the voter s decision making could be incorrect direct distortion the candidates have an incentive to win the election by influencing the media coverage through policy settings indirect distortion as a result policy convergence to the voter s ideal policy occurs if and only if the media bias is sufficiently small we then characterize the set of equilibria in terms of the degree of distortion the results suggest that if either strategic media manipulation or competition among the candidates is omitted then the distortion is nonnegligibly misspecified

a market equilibrium analysis of the impact of risk on the u s rice industry an economic model of supply demand for u s rice suggests that increases in risk result in decreased acreage and increased marketing margins in a market equilibrium context the empirical results also suggest rice production and rice prices are more responsive to changes in risk faced by marketing firms than changes in risk faced by producing firms

price risk in supply equations an application of garch time series models to the u s broiler market that risk considerations figure prominently into agents decisions is now widely recognized by both theoretical and applied economists for example much research has focused on extending neoclassical production theory to include agents that maximize expected utility of returns under price and or output uncertainty 37 4 25 35 12 31 concurrent with this theoretical research on risk has been a growing literature on the empirical effects of risk on economic decisions examples include the studies on the role of risk in aggregate agricultural production and

analysis of a supply control program under uncertainty and imperfect competition chinese cabbage in taiwan researchers have often attributed the farm wholesale price spread after adjusting for marketing costs as compensation for marketing firms risk bearing however price spreads in excess of marketing costs can also be due to marketing firms exercise of market power in settings where both imperfect competition and marketer risk aversion are plausible a modeling framework must be sufficiently general to accommodate both types of behavior this article develops and estimates such a model in the context of fresh produce marketing and develops the implications for analysis of supply control programs the model is applied to the production and marketing of chinese cabbage in taiwan and specifically to the analysis of supply control programs implemented in this industry by the taiwanese government the empirical results provide little support for the hypothesis that marketing firms exhibit risk averse behavior but they do show that marketing firms exercise oligopsony power in procurement of the product from farmers and that this power is positively related to the quantity supplied in each market period this provides a heretofore unexplored impetus for supply controls intended to raise producer incomes however such controls are also rendered less effective by imperfect competition because marketing firms capture part of the benefits from supply reduction

a model of electoral competition with incomplete information a model of two candidate electoral competition is developed in which voters are uncertain about the policy either candidate would implement if elected candidates simultaneously announce policy positions from which voters attempt to infer the true positions the candidates would adopt announcing a position different from the true position is costly to the winning candidate with these costs increasing as the difference between the true policy and the announced policy increases a refinement of the sequential equilibrium concept is used to describe the behavior of candidates and voters

media as watchdogs the role of news media in electoral competition abstract we develop an equilibrium model to analyze the role of the media in electoral competition when policy payoffs are state dependent party policies do not converge to the median voter s ideal policy if the media report only party policies news analysis about the state though possibly biased can discipline off equilibrium deviations and make the parties adopt more centrist policies since voters are rational the party favored by the media need not win with a higher probability instead media bias may reduce the effectiveness of electoral competition and lead to more polarized policies

four approaches to commodity market stabilization a comparative analysis the effects of four alternative price stabilization programs for soybeans are compared using a rational expectations model and simulation for a given government expenditure subsidized private storage is the most efficient way to stabilize market price for a given deadweight loss a program of direct payments is the most efficient stabilizer of the effective farm price this program does not stabilize market price all four programs including a buffer stock program and one involving both direct payments and buffer stocks tend to destabilize quasi rent programs that involve an initial build up of stocks increase producer benefits and hurt consumers

why economic reforms fail in the soviet system a property rights based approach jan winiecki why do economic reforms fail in soviet type systems despite the obvious interest of ruling groups in improving the performance of their ailing economies the author applies a property rights based analysis stressing modes of rent maximization by ruling groups as a crucial explanatory variable party apparatchiks and economic bureaucrats particularly benefit from persistent interference in the economic sphere and consequently are most interested in maintaining the status quo the author surveys the impact of these motivations on the content of economic reforms outlines the strategies of counterreformers and predicts the future of reforms in soviet type economies 1 introduction in analyzing the disequilibrium characteristics of contemporary western economies mancur olson 1982 1984a 1984b agrees with the neoclassical macroeconomists in finding that given the tendencies of markets to clear and given the rational expectations of economic agents any disequilibrium indicates that all mutually advantageous transactions have not been consummated having made this point however he asks what can make agents ignore the potential gains from unconsummated transactions and turns his attention toward the structure of incentives and thus of institutions and policies olson insists and rightly so that a satisfactory static and dynamic macroeconomic theory has to explain who among key actors has the incentive to generate economic growth and equilibrate the economy and who does not furthermore no government even an authoritarian one has an incentive to generate serious recessions or disequilibria olson 1984a 637 writes that even in dictatorial systems the dictator has an incentive to make the economy of the country he controls work better since this will generate more tax receipts he can use as he pleases and usually also reduce dissent olson s arguments about incentives institutions and disequilibria offer an ideal basis for an inquiry into why reforms fail in soviet type economies stes in olson s theories of incentives the old roman principle of criminal law cui prodest who gained is applied to modem economies and the results suggest that contrary to widespread opinion it is not necessarily the small but powerful group of high and highest leaders that stands to gain most in terms of power and privilege from the preservation of the existing order a powerful political elite could satisfy its desires for both power and privilege through an alternative undemocratic system one which involves authoritarian don ts rather than totalitarian do s in that perspective the inefficient system of economic control typical in stes involving centrally planned production goals and input rationing would not be a condition sine qua non of an authoritarian solution since totalitarian command and control systems persist however one must seek groups other than the powerful and privileged few which have incentives to resist reforms and keep the economy inefficient the following sections identify the membership and motives of groups having strong incentives to keep the stes inefficient and prevent successful i e market oriented reforms we show how those groups operate and analyze their effects on the economic performance of their countries first the incentives for these groups to prevent decentralized management in the state sector are spelled out then their incentives to prevent the expansion of the more efficient private sector are outlined third having identified who benefits from the status quo and why the paper discusses when and how market oriented reforms are aborted limited or reversed by those who stand to gain from the reforms failure the last two sections consider the prospects of current attempts at economic reform in three specific countries poland the ussr and china and the prospects for economic reform in stes more generally

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

a theory of price control price or rent control is but one of many forms of legislative action which interfere with private contracting in the market place to delimit the scope of my analysis i shall use the term price control to refer only to any set of regulations which satisfies the following three conditions first the control must fix the price or income terms of private contracts this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis 2 second the control must involve no appropriation of proceeds to or from the government taxation and subsidization are thus excluded finally the fixing of price must not be associated with direct government sales purchases or manipulation of resources so as to maintain the regulated price 3 by this stipulation price support is also excluded even on such terms legal regulations to control price are still many and varied to evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts by this criterion the available body of economic theory pertaining to price control is deficient indeed the massive literature on the subject offers few such implications 4 an alternative approach to analyzing the observable effects of price control is presented here

mass media competition political competition and public policy if better informed voters receive favourable policies then mass media will affect policy because mass media provide most of the information people use in voting this paper models the incentives of the media to deliver news to different groups the increasing returns to scale technology and advertising financing of media firms induce them to provide more news to large groups such as taxpayers and dispersed consumer interests and groups that are valuable to advertisers this news bias alters the tradeoff in political competition and therefore introduces a bias in public policy the paper also discusses the effects of broadcast media replacing newspapers as the main information source about politics the model predicts that this change should raise spending on government programmes used by poor and rural voters

the effect of barge and ocean freight price volatility in international grain markets this paper looks at the potential role of time varying volatility of mississippi river barge and ocean freight prices on commodity prices in illinois at the us gulf and in rotterdam using a vector error correction garch in mean model the model is used to infer the extent to which transportation price risk affects price dynamics in international grain markets results from a simulation exercise indicate that both barge and ocean price volatility influence grain prices but barge price volatility tends to have a greater impact on grain prices and marketing margins than that arising from ocean price volatility consistent with most studies that evaluate the role of risk in marketing channels results here suggest that a reduction in barge rate risk would reduce marketing margins between illinois and the us gulf and between the us gulf and rotterdam the existence of an ocean freight futures contract coupled with the lack of a futures contract for barge rates may be partially responsible for the finding that barge rates have a significant influence on grain prices and contribute most to wide marketing margins found throughout the international grain marketing system

empirical advances in political economy editor s note i wish to thank coeditor mark zupan who took responsibility for organizing and implementing both the special symposium on public choice and the processing of papers through the refereeing and editorial process for this special section on behalf of all the editors i also would like to express thanks to carolyn williams editorial coordinator for taking on yet another responsibility in arranging the conference symposium meetings and the management of the files the symposium on public choice was held at lake tahoe during the 1993 we a meetings the many efforts of authors referees editors and staff have resulted in an exciting complement to this year s economic inquiry offerings

beyond keynesianism and monetarism though there is consensus among economists about microeconomic theory neither the keynesian nor the monetarist theory of macroeconomics has attracted a consensus presumably because neither is compelling enough to persuade the skeptical a new approach to the subject that combines insights from each of the familiar schools with considerations that both schools have overlooked is accordingly offered here this argument accepts the evidence that involuntary unemployment and depressions sometimes occur and thus rejects the finding of the new classical or equilibrium macroeconomics that markets always clear and that all individuals and firms are in equilibrium it also rejects the keynesian assumption of wages or prices arbitrarily fixed at disequilibrium levels and insists that any adequate theory must show what interests are served by the existence of involuntary unemployment the theory offered here shows that an institutional or organizational arrangement common in all societies which have experienced widespread unemployment and deep recessions entails that many firms and individuals will be in disequilibrium this disequilibrium becomes more severe when there is unexpected deflation or disinflation the disequilibrium is of precisely the type commonplace in recessions and entails involuntary unemployment the theory also shows how groups of individuals and firms can gain from practices that entail involuntary unemployment and underutilization of resources for others