resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

beyond implicit prices recovering theoretically consistent and transferable values for noise avoidance from a hedonic property price model using a two stage hedonic pricing methodology we estimate a system of structural demand equations for different sources of transport related noise in the first stage we identify market segments using model based clustering techniques and estimate separate hedonic price functions hpfs for each segment in so doing we show how a semiparametric spatial smoothing estimator outperforms other standard specifications of the hpf in the second stage we control for non linearity of the budget constraint and identify demand relationships using techniques that account for problems of endogeneity and censoring of the dependent variable our estimated demand functions provide welfare estimates for peace and quiet that we believe to be the first derived from property market data in a theoretically consistent manner

comparing tax and tax reallocation payments in financing rail noise abatement programmes results from a stated choice valuation study in italy the paper examines the use of stated choice experiments sc to assess the economic value of alternative rail noise reduction interventions on the brennero railway in italy the paper formally tests the econometric robustness of the sc estimates under three payment regimes a a regional tax where consumers must trade off welfare gains due to noise reduction for part of their income b a transport tax reallocation scheme where consumers must trade off a part of the tax payments that are currently spent on the public transport sector and c an administration tax reallocation scheme where consumers must trade off a part of the tax payments that are currently spent on the administration sector the test results are varied on the one hand the sc estimates are found to be statistically different for the tax reallocation and the tax introduction regimes this confirms previous valuation research results and thus reiterates the hypothesis that states the inequality between marginal values of private income and public money on the other hand the sc estimates are not found to be statistically different for the two proposed tax reallocation regimes suggesting that in the case study investigated here the marginal value of public money does not depend upon the budget source

state intervention for food price stabilisation in africa can it work abstract although its arguments may have more general applicability this paper discusses the desirability and options for the stabilisation of staple food prices principally in eastern and southern africa it addresses three broad questions i why is stabilisation of food grain prices desirable ii what is technically feasible and iii can the governance and trade issues thrown up by suggested mechanisms be solved it considers a number of options for price stabilisation assessing the strengths and weaknesses of each and suggesting situations in which each may be appropriate

high and declining prices signal product quality high and declining prices signal a high quality product high prices are the efficient means of signaling because the consequent loss of sales volume is most damaging for lower cost lower quality products as time passes and the number of informed consumers increases the signaling distortion lessens resulting in a declining price profile the prediction of high and declining prices is robust across a variety of dynamic models and is consistent with recent empirical findings copyright 1991 by american economic association

a review of the ecological and socioeconomic effects of biofuel and energy policy recommendations abstract many countries have attached great emphasis on biofuel because it is universally acknowledged renewable and sustainable however there remain doubts regarding biofuel s renewability cleanliness and ecological friendliness in addition its impacts on income employment and food security have been widely discussed therefore the effect of developing biofuel as an important method of resolving the energy crisis and climate change is questioned based on the rocketing concern on the multiple effects of biofuel this paper provides a comprehensive and updated review of the literature on biofuel s ecological effects and socioeconomic effects the literature included in this paper is selected english language papers being published since 2004 we find that existing studies have not arrived at a consensus regarding the ecological or the socioeconomic effects of biofuel there remain uncertainty and doubts toward biofuel s renewability and cleanliness biofuel s impacts on water and biodiversity are also questioned although biofuel is widely regarded to have positive impacts on income and employment many studies prove that biofuel influences food security negatively besides biofuel s economic cost is likely to be the barrier to its promotion because of the uncertainty of biofuel s impacts this study recommends cautious attitude toward biofuel development especially for those countries where biofuel development would be inappropriate and suggests that policy makers engage in demand side management instead of unsustainable supply side management

distributional effects of maize price increases in malawi abstractin the wake of highly volatile world prices of staple commodities we examine the impacts of increases in maize prices on various categories of households in malawi using household level data changes in household income are calculated taking into account the net maize production status of the household and food price elasticities estimated from a censored demand system while maize price increases have unequivocal deleterious effects on the incomes of urban households rural households experience differential impacts net producing households in rural areas benefit from price increases with households above the poverty line obtaining proportionally higher incomes

biofuels and food security micro evidence from ethiopia abstract there is considerable controversy about the impact of biofuels on food security in developing countries a major concern is that biofuels reduce food security by increasing food prices in this paper we use survey evidence to assess the impact of castor production on poor and food insecure rural households in ethiopia about 1 3 of poor farmers have allocated on average 15 of their land to the production of castor beans under contract in biofuel supply chains castor production significantly improves their food security they have fewer months without food and the amount of food they consume increases castor cultivation is beneficial for participating households food security in several ways by generating cash income from castor contracts they can store food for the lean season castor beans preserve well on the field which allows sales when farmers are in need of cash or food spillover effects of castor contracts increases the productivity of food crops increased food crop productivity offsets the amount of land used for castor so that the total local food supply is not affected

consumer preferences for fresh food items with multiple quality attributes evidence from an experimental auction of pork chops this study illustrates an application of experimental auction methods using both experimental economics and experimental design to evaluate consumer perceptions and willingness to pay wtp for fresh pork chops we test and reject hypotheses that a market prices and consumers wtp are unaffected by the level of attributes embodied in the pork chops b appearance based on photographs or actual product and actual taste are equally good sources of consumer information and c consumers are consistent in their preferences for fresh pork attributes a major conclusion is that predicting consumer demand for fresh pork or any fresh food based on appearance without tasting is unproductive

higher fuel and food prices impacts and responses for mozambique rising world prices for fuel and food represent a negative terms of trade shock for mozambique the impacts of these price rises are analyzed using various approaches detailed price data show that the world price increases are being transmitted to domestic prices short run net benefit ratio analysis indicates that urban households and households in the southern region are more vulnerable to food price increases rural households particularly in the north and center often benefit from being in a net seller position longer term analysis using a computable general equilibrium cge model of mozambique indicates that the fuel price shock dominates rising food prices from both macroeconomic and poverty perspectives again negative impacts are larger in urban areas the importance of agricultural production response in general and export response in particular is highlighted policy analysis reveals difficult trade offs between short run mitigation and long run growth improved agricultural productivity has powerful positive impacts but remains difficult to achieve and may not address the immediate impacts of higher prices

how should food safety certification be financed an analytical framework where consumers are imperfectly informed about the safety of products is used to investigate the welfare effects of a public certification system several certification fees under alternative structures of certification cost are analyzed by maintaining competition among numerous sellers voluntary certification financed by a per unit fee is efficient and sufficient to signal product safety however mandatory certification linked with a fixed user fee may be necessary if a seller wields monopoly power further certification by a single private agency results in a distorted fee copyright 2001 oxford university press

welfare gains from quality certification of infant foods results from a market experiment in mali in low income countries malnutrition is often most severe among infants of six to twenty four months they need higher density foods than the family diet but density is a credence attribute we hypothesize that the premium now paid for heavily advertised brands reflects demand for quality assurance which could be provided at lower cost to competing firms through third party certification we use a new market experiment to find that mothers average willingness to pay for certification is about 1 75 kg or four times its cost so that total economic surplus gains from introducing certification to mali would be on the order of 1 million annually

trading taxes vs paying taxes to value and finance public environmental goods the potential sensitivity of environmentalresource valuation to payment vehicles is ofinterest to researchers and decision makersinvolved in estimating and applying thesenumbers a conceptual model is developed whichprovides insight into how the different paymentvehicles of a special tax and a taxreallocation affects the willingness to pay wtp for environmental goods hypothesistesting using contingent valuation datasuggests wtp with a tax reallocation is higherthan wtp with a special tax for ground waterquality protection in georgia and maine usa technical measurement and welfare analysisimplications and limitations of valuing andfinancing public environmental goods using taxrealloactions are discussed

informing food security decisions in africa empirical analysis and policy dialogue discussions of economic and agricultural development in africa have focused heavily in recent years on structural adjustment i e basic policy changes aimed at allowing international and domestic markets to play a greater role in coordinating national economic activities often these structural adjustments and accompanying policies aimed at improving economic performance have been based on several implicit assumptions about how african food systems operate yet for many countries little empirical information has been available to test these assumptions hence designing policies too often becomes an exercise in planning without facts this paper argues that not only is there a need to base food security and structural adjustment policies more firmly on empirical information but that the process by which the information is obtained is as important as the information itself agricultural economists and other social scientists can and increasingly should design policy research in africa in ways that simultaneously increase effective demand for empirical information as an input into the ongoing policy process and augment african capacity continually to inform policy deliberations we illustrate the payoffs to such an approach by drawing on selected experience in several african countries weber

comparing open ended choice experiments and experimental auctions an application to golden rice we use two experimental valuation methods to estimate consumer demand for genetically modified golden rice the first is an open ended choice experiment oece where participants name the quantities of golden rice and conventional rice demanded at each of several price combinations one of which will be randomly chosen as binding this allows us to estimate market demand by aggregating demand across participants this estimate of market demand also allows us to estimate own price elasticity and consumer surplus for golden rice comparing willingness to pay wtp estimates from the oece with those from a uniform price auction we find that oece wtp estimates exhibit less affiliation across rounds and the effects of positive and negative information under the oece are more consistent with prior expectations and existing studies we also find that while auction wtp estimates more than double across five rounds oece wtp estimates are stable across rounds and are always roughly equal to those from the final auction round

prices as signals of product quality this paper is concerned with the provision of quality in markets in which consumers have only imperfect information the analysis focuses on a market for a product that can be produced at different quality levels all consumers prefer higher to lower quality but they may differ in their willingness to pay for quality producers can produce any quality they like but higher qualities are more costly to produce the information in this market is imperfect in the sense that the exact quality chosen by a firm is known only to the firm itself some information about the quality of a firm s product will however reach its potential customers even if they do not make any special effort to acquire it within the framework suggested here two conclusions are drawn first prices may serve as signals which exactly differentiate the available quality levels that is there exists a fulfilledexpectations equilibrium at which each price signals a unique quality level second the pricesignals are not arbitrary each price signal exceeds the marginal cost of producing the quality it signals such a mark up depends on the nature of the product specific information received by consumers the poorer the information the higher the mark up

a comparison of compensating surplus and budget reallocation with opportunity costs specified the use of most nonmarket valuation techniques is predicated on respondents paying additional amounts of money for increased provision of a public good however in many circumstances this may not be appropriate treaty rights or the capacity of a government to raise and collect taxes in the context of a developing country may preclude the introduction of new taxes alternatively there may be settings where respondents reject the notion of an additional payment and a different approach to estimating nonmarket values is needed this article demonstrates a methodology for estimating compensating budget reallocation which is the amount of expenditure on other public goods that respondents are willing to forego for the government to provide more of another public good one of the main contributions of this article is a demonstration of how to improve the specification of the opportunity costs of budget reallocations second using choice modelling for the estimation of budget reallocations is compared with

public funding of environmental amenities contingent choices using new taxes or existing revenues for coastal land conservation alternative funding approaches affect stated preferences an individual s willingness to reallocate existing tax dollars exceeds willingness to pay new taxes to conserve land however stated preferences also imply a non zero opportunity cost to existing tax dollars different income groups reveal statistically equivalent marginal utilities both for income and for reallocating tax dollars yet individuals with lower income show a relatively larger increase in their willingness to support land conservation when the choice shifts from new taxes to reallocation of existing tax dollars the paper encourages consideration of equity implications that may be obscured when analysts focus on willingness to pay

anatomy of a crisis the causes and consequences of surging food prices although the potential causes and consequences of recent rising international food prices have attracted widespread attention many existing appraisals are superficial and or piecemeal this article attempts to provide a more comprehensive review of these issues based on the best and most recent research as well as on fresh theoretical and empirical analysis we first analyze the causes of the current crisis by considering how well standard explanations hold up against relevant economic theory and important stylized facts some explanations turn out to hold up much better than others especially rising oil prices the depreciation of the u s dollar biofuels demand and some commodity specific explanations we then provide an appraisal of the likely macro and microeconomic impacts of the crisis on developing countries we observe a large gap between macro and micro factors which when identifying the most vulnerable countries often point in different directions we conclude with a brief discussion of what ought to be learned from this crisis

advertising and quality in the u s market for automobiles using data consisting of domestic and foreign automobiles over the period 1985 1990 the hypothesis that advertising serves as a signal of higher quality is empirically tested this is accomplished by examining how advertising levels vary with a quality measure that is not observable at the time of purchase but becomes available subsequent to a model s release above average quality results in expenditures that are 15 higher than average quality outlays lending further support to the signalling hypothesis the positive advertising quality relationship holds strongest when a model significantly improves in quality relative to the previous year s model

a test of nutritional quality signaling in food markets prior to implementation of mandatory labeling in may 1994 new nutrition labeling regulations went into effect in the united states requiring mandatory disclosure of information on the nutritional content of foods this article uses grossman s model of totally effective quality signaling to evaluate whether markets were effective in information provision prior to the new regulation if markets were effective in providing information to consumers on the nutritional quality of foods the new regulation would be unnecessary the results of the logistic model where the probability of voluntary information disclosure is linked to the nutritional quality of food products and their prices indicate that private quality signaling was not reliably at work in food markets prior to implementation of the mandatory nutrition labeling regulation copyright 2000 oxford university press

no choice options within a nested logit model one model is insufficient we examine the impact of providing a no choice option in attribute based valuation experiments the aim of the experiment was to assess monetary values of cockle fishery management practices in the dutch wadden sea for different stakeholder groups namely dutch citizens local residents and tourists the current policy debate about the management of the wadden sea stresses the fact that individual preferences with respect to cockle fishery differ the aim of this article is to analyse the individual preferences in a objective way special attention is given to the influence of including a no choice option which is analysed using a nested logit model we test whether the full set of options can be considered as close substitutes the estimation results show that the influence of including the no choice option differs among the stakeholders considered

self reported food insecurity in africa during the food price crisis this article analyzes data on self reported food insecurity of more than 50 000 individuals in 18 sub saharan african countries over the period 2005 2008 when global food prices increased dramatically the average level of self reported food insecurity was high but remarkably stable over time at about 54 however this average hides large heterogeneity both within countries and across countries in eight of the sample countries self reported food security improved while it worsened in the ten other countries our results suggest that heterogeneous effects in self reported food security are consistent with economic predictions as they are correlated with economic growth and net food consumption both at the household and country level specifically in the face of rising food prices self reported food security improved on average in rural households while it worsened in urban households a finding that holds when using global prices or domestic food prices improvements in food security over time were also positively correlated with net food exports and gdp per capita growth while the self reported indicator used in this paper requires further study and one should carefully interpret the results our findings suggest the need for a critical evaluation of the currently used data and numbers in the public debate on food prices and food insecurity

price and advertising signals of product quality we present a signaling model based on ideas of phillip nelson in which both the introductory price and the level of directly uninformative advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good repeat purchases play a crucial role in our model a second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals

local impacts of a global crisis food price transmission consumer welfare and poverty in ghana abstract this paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in ghana it also assesses the impacts of food price increases on various household groups taking the 2007 2008 global food crisis as an example we show that prices for domestic grain products are highly correlated with world market prices this is true both for products for which ghana is highly import dependent e g rice and the products for which ghana is self sufficient e g maize the econometric results also show that price transmission is high between regional producer markets and markets located in the country s largest cities and the distance between producer and consumer markets and the size of consumer markets matter in explaining the price transmission the welfare analysis for households as consumers shows that the effect of world food prices appears relatively modest for the country as a whole due to relatively diverse consumption patterns within country however the national average hides important regional differences both between regions and within different income groups we find that the poorest of the poor particularly those living in the urban areas are hardest hit by high food prices the negative effect of the food crisis is particularly strong in northern ghana the main explanations for this regional variation in the price effect is the different consumption patterns and much lower per capita income levels in the north of ghana compared to other regions in the country

farmers welfare and changing food prices nonparametric evidence from rice in madagascar this paper uses nonparametric density estimation and kernel smoothing techniques to examine the instantaneous distributional implications of rice price changes in madagascar while many farmers do not participate in product markets as either buyers or sellers and net sales or marketable surplus are fairly small for many others the roughly one third of rice farmers who fall below the poverty line face significant negative first order welfare effects from increases in the mean or variance of rice prices conversely the first order gains from rice price increases are highly concentrated among the largest rice farmers and particular regions in madagascar

the impact of food inflation on urban poverty and its monetary cost some back of the envelope calculations this paper uses a sample of 73 developing countries to estimate the change in the cost of alleviating urban poverty brought about by the recent increase in food prices this cost is approximated by the change in the poverty deficit that is the variation in financial resources required to eliminate poverty under perfect targeting the results show that for most countries the cost represents less than 0 1 percent of gross domestic product however in the most severely affected it may exceed 3 percent in all countries the change in the poverty deficit is mostly due to the negative real income effect of those households that were poor before the price shock while the cost attributable to new households falling into poverty is negligible thus in countries where transfer mechanisms with effective targeting already exist the most cost effective strategy would be to scale up such programs rather than designing tools to identify the new poor

the global food crisis disaster opportunity or non event household level evidence from cote d ivoire summary using 2008 lsms data for cote d ivoire we study the welfare implications of the price increase of key imported staple food rice and consider the consumption smoothing effect of locally produced food and cash crop varieties while middle income urban households are adversely affected by rising rice prices relatively poor rural households benefit availability of local staple alternatives leads to further income redistribution from net consumers toward net producers of staples by contrast the ability to generate income from tropical cash crops not only improves the welfare of rural households but helps smooth the consumption of urban households

will they buy it the potential for marketing organic vegetables in the food vending sector to strengthen vegetable safety a choice experiment study in three west african cities abstract considering the hazardous use of synthetic pesticides in vegetable production in urban west africa this research investigated the marketing potential of organic vegetables in the food vending sector of cotonou benin accra ghana and ouagadougou burkina faso certified organic production and marketing was examined as a potential strategy to improve chemical food safety a stratified random sampling strategy was applied to study the preferences of food vendors n 180 and consumers n 360 vegetable use risk perception choice preferences and willingness to pay wtp for organic certification were specifically analyzed the results showed that awareness of chemical contamination risks was generally low appearance of a product was central to vendor choice consumers attributed similar utility to taste and organic certification consumer wtp was calculated to be a premium of 1 04 usd per plate if the food served contained only certified organic vegetables in restaurants this would mean an average premium of 19 for a meal if certified organic vegetable production is to make a positive impact on food safety in urban west africa we suggest concentrating marketing efforts on the educated elite who frequent restaurants however considering that restaurant owners exhibited a lower preference for organic certification than lower class food vendors the marketing situation is difficult we therefore conclude that demand from the food vending sector alone will not institutionalize domestic certification mechanisms this underlines the need for public commitment to facilitating such change

analysing decision behaviour in stated preference surveys a consumer psychological approach this paper applies a typology adapted from the consumer psychology literature to a contingent valuation method cvm survey we argue that the typology is helpful as a way of identifying responses that contain useful information on preferences for the environmental good in question relative to those which are unlikely to contain such information applying this framework to a cvm study of agri environmental payments in germany we find that some 90 of responses are preference revealing this distribution changes when the framing of the good is changed the typology may be of most use during the design stage of future cvm studies since it enables researchers to increase the fraction of responses that are useful