a theoretical and empirical analysis of family migration and household production reply of her household production as factors in the family s migration decisions 38 in this paper the research on family migration will be extended in three ways a formal model of household production and family migration will be developed and used to generate testable hypotheses about family migration variables which otherwise would not have a clear economic interpretation are incorporated into the model the model will then be estimated and some policy implications will be discussed one policy implication concerns the efficiency of the labor market labor market efficiency needs to be judged not only in terms of the efficiency of the job search of single individuals but also in terms of the efficiency of the joint job search of double income families this paper is organized into five sections first a comparative static household production model of locational choice is developed 2 next this model of locational choice is used to develop a theoretical model of family migration third the data and empirical model are discussed fourth the empirical results are reported and interpreted in terms of three different types of migration estimates of the impact of selected variables on the distance of the move are also considered the final section summarizes the general findings and offers some policy implications

the impact of uncertainty shocks in emerging economies abstract a recent strand of research proposes that sudden jumps in uncertainty generate rapid drops and recoveries in real macroeconomic variables that drive the business cycle using an empirical model we find substantial heterogeneity in reactions to these shocks across countries in comparison to the u s and other developed countries emerging economies suffer much more severe falls in investment and private consumption following an exogenous uncertainty shock take significantly longer to recover and do not experience a subsequent overshoot in activity we provide evidence that the dynamics of investment and consumption are correlated with the depth of financial markets we control for the potential role of a credit channel and estimate that it can account for up to one half of the increased fall in investment generated by uncertainty shocks among emerging economies with less developed financial markets in this context monetary and fiscal policy actions that alleviate the impact of credit constraints facing firms may reduce the impact of uncertainty shocks in these economies

distribution of research gains in multistage production systems research irrespective of the incidence of the levy and benefits no longer is valid we have no disagreement with this important observation but we are concerned about the lack of reliable estimates of the elasticity of substitution building on muth s analysis for which we suggest some changes we explore further the sensitivity of the effects of the distribution of benefits of research to different ways in which research can impact on a multistage production system and to the effects of the elasticities

efficient methods of measuring welfare change and compensated income in terms of ordinary demand functions a utility maximizing consumer with a completely known system of ordinary demand functions q h p c is considered let p qo and p q be two arbitrary equilibrium situations the problem is to evaluate in which of the situations the utility is higher without knowing the utility function revealed preference theory tells that the ordinary demand functions which are in principle observable contain enough information to solve the problem remaining difficulties are therefore mainly computational we present how the compensated income c i c p qo and the compensated demand h p cl1 are calculated with arbitrary accuracy using only the ordinary demand system our two efficient algorithms also have interesting interpretations in terms of index numbers and consumer surplus measures

the dual structure of incomplete demand systems integrability of incomplete demand systems is discussed the concepts of weak integrability quasi expenditure function quasi indirect utility function and quasi utility function are defined their relationships to the expenditure function indirect utility function and utility function are developed the dual structure of the quasi functions permits exact welfare analysis and reveals the conditional preference structure for the commodities of interest new results relating the uniqueness and exactness of consumer s surplus to the structure of the expenditure and indirect utility functions are obtained

evaluating the uncertainty in estimates of the economic impacts of bovine leukosis virus in u s dairy cows an examination of the economic impacts of bovine leukosis virus indicated that reduced milk production attributed to the presence of bovine leukosis virus in dairy cows reduced consumer surplus by 2 7 2 3 billion us bus and resulted in a total partial equilibrium loss of 720 560 million us mus to the u s economy in 1996 most of the economic surplus lost by consumers was transferred to producers whose economic surplus increased by 2 0 1 8 bus as a result of reduced milk production attributed to the presence of bovine leukosis virus in dairy cattle uncertainty analysis showed that an estimate of the milk production decline per percent increase in the prevalence of bovine leukosis virus in dairy cows accounted for most of the uncertainty in the economic impact estimates if bovine leukosis virus had not been present in u s dairy cows then milk production would have increased by 2 0 billion 1 5 billion kg the price would have fallen by 3 8 3 2 cents kg and the value of the milk produced would have decreased by 2 1 1 9 bus guidelines delineated by the international organization for standardization for evaluating and expressing uncertainty in measurement are discussed and proposed for use in the context of broad national estimates for which the economic impacts of bovine leukosis virus serve as an example the principal advantages of the methodology are the clarity and transparency of results and the ability clearly to identify major uncertainty contributors

migrant information job search and the remigration decision labor force migration poses two important questions for the economist the first concerns the nature magnitude and direction of labor force response to perceived earnings differentials over space the latter and more complex question concerns the effectiveness or efficiency of this response namely migration and other market mechanisms in reducing these earnings differentials over time both questions are addressed in this paper by examining relationships among 1 quality of information obtained prior to a move 2 search duration at the migration destination and 3 the likelihood of subsequent perhaps corrective remigration these relationships are analyzed using the human capital model of migration remigration and data from the 1970 u s census excerpt

an equilibrium displacement approach to oligopoly market analysis an application to trade in the korean infant formula market this article uses an equilibrium displacement model edm to assess the impact of a change in trade policy in the korean infant formula market that is assumed to be oligopolistic domestic oligopolists compete in a market for a homogenous good with importing firms who enjoy the same level of market power as the domestic producers within an edm framework we investigate how the market adjusts to a new equilibrium in response to an external policy shock that improves access to foreign goods our empirical work consists of two steps we first econometrically estimate the market demand elasticity and market power parameter then using these estimates we simulate our edm model to assess the distributional effects of tariff cuts and other changes in marginal cost simulation results show that with a lower market price and increased consumption the change in consumer surplus resulting from tariff reduction is unambiguously positive but that the change in social welfare can be in either direction depending on who receives market rents associated with imports when importing firms are domestic the domestic welfare change is definitely positive however in the case of foreign importing firms the direction of the welfare change crucially depends on the demand elasticity

evaluating returns to agricultural research a review this paper reviews and compares the most common approaches used to evaluate public agricultural research investment ex post studies fall into two major groups a consumer and producer surplus analyses estimating average rates of return to research and b production function analyses estimating marginal rates of return to research ex ante studies fall into four groups a those using scoring models to rank research activities b those employing benefit cost analysis to establish rates of return to research c those using simulation models and d those using mathematical programming to select an optimal mix of research activities

microeconometric analysis of residential water demand this paper develops a structural model for obtaining price elasticities and evaluating consumer s response to changes in nonlinear tariffs when only panel data on household consumption are available the model and the empirical strategy address problems implied by nonlinear tariffs existence of a fixed cost and use of limited data giving rise to a random effects model with a nonlinear individual effect results show that the estimated model does well at fitting data and demand is inelastic although elasticity varies by initial consumption block then i estimate welfare consequences of implementing several demand policies

the effects of supply shifts on producers surplus changes in the supply curve caused by technological improvements in production or changes in national policy may or may not benefit producers as a whole depending on the type of shift in the supply curve a structured analysis of different changes in the supply curve that model this situation is given and the change in producers surplus is examined depending on quantitative aspects of the supply and demand curves for supply and demand curves that are linear or power functions a small downward pivot of the supply curve will increase producers surplus only if the equilibrium point is far enough into the elastic region of the demand curve and any downward pivot of the supply curve will decrease producers surplus if the equilibrium point is in the inelastic region of the demand curve similar results are obtained for the more general case of convex supply and demand curves

estimating market power of u s dairy cooperatives in the fluid milk market a structural econometric model of vertical relationships is adopted to identify pricing behavior in the supply chain for fluid milk in the united states the model consists of a system of equations that allows estimation of oligopoly power of dairy co operatives and downstream firms exploiting federal milk marketing order regulations to identify co operatives marginal cost a key finding is that co operatives use their market power to raise the farm price of milk by almost 9 above marginal cost resulting in an income transfer of more than 600 million per year in markets regulated by federal milk marketing orders copyright 2012 oxford university press

price changes supply elasticities industry organization and dairy output distribution long run price elasticities of milk supply are decomposed into price elasticities of yield herd size and farm population for northeastern u s dairy farms these elasticities are shown to vary with farm size because of size related differences in capital intensity specialization yield and herd size variability and rates of entry exit into dairy in the short run price responsiveness is shown to decrease with farm size in the long run large farms are shown to be most price responsive results suggest that lower milk prices could make revenue distribution less equal in both the short and long run by altering output and population distributions

us dairy policy alternatives under bovine somatotropin a dynamic optimal control model is constructed to study us dairy policy alternatives under bovine somatotropin bst the results indicate that the adoption of bst might be slower than that indicated by the early surveys even if adoption is widespread the government can have the potentially large milk surplus problems under control with a combination of price support generic milk advertising and a cow buy out with bst adoption the government would set lower support prices and would increase assesment for milk advertising compared with the no bst case the higher adoption rates the lower the support prices and the higher the advertising assesments it is found that bst adoption is socially beneficial consumers gain at the expense of producers the government can however help produces by giving a larger policy weight to producers in setting the optimal levels of policy variables finally it is found that the current levels of generic advertising are too low and the allocation of advertising bet

returns to public irrigation development recently returns to public investment in general and irrigation investment in particular have received critical attention from economists young martin two of the important interrelated issues are a how to measure beneficial impacts of irrigation projects and b who should pay for this public investment once we know the magnitude of benefits created and the beneficiaries we should be able to recommend who should pay for this investment and how much they should pay for simplicity we classify the beneficiaries of public irrigation into two major groups producers and consumers most studies freeman keleta u s water resources council u s department of the interior and references cited in young young and gray and martin on returns to irrigation emphasize production gains from irrigation the gains enjoyed by consumers are typically omitted the exception being martin s work the implicit assumption here is that the relevant commodity demand curves are perfectly elastic as martin argues this assumption may be valid for a particular project but not for the general equilibrium context taking into account all the projects undertaken in a period thus the proper demand curve to use is not perfectly elastic but downward sloping for a valid evaluation of benefits of public irrigation one should account for both consumer and producer surpluses doing that will provide us with objective criteria concerning who should pay how much for irrigation investment thus the specific objectives here are a to derive analytical expressions for measuring consumer and producer surpluses when public irrigation investment shifts the supply function for commodities and b to derive expressions for the exact distribution of gains between consumers and producers i consumers and producers surpluses with irrigation

consumer s surplus versus compensating variation revisited consumer s surplus and a second order approximation to compensating variation are compared to the exact compensating variation for a subsystem of several commodities an empirical application to the relative retail price distortions created by the u s dairy program is presented in the application a new specification for weakly integrable incomplete demand models is developed and estimated the integrable demand model has sufficient flexibility that it is not rejected by the data both welfare approximations are found to introduce large errors in the measurement of deadweight losses

effects of milk marketing order regulation on the share of fluid grade milk in the united states the share of raw milk meeting fluid quality grade a standards in the united states rose steadily through the latter half of the twentieth century but a shrinking portion of that was used in fluid products grade a milk exceeds the quality standards for the manufactured products for which it has been increasingly used we present an econometric model that exploits regional and temporal variation in policy implementation to identify the effect of marketing orders on the grade a share of milk results support the hypothesis that marketing orders significantly encouraged the growth in the grade a share of milk milk marketing orders are central to dairy market regulation in the united states since the agricultural marketing agreement act amaa of 1937 and similar state legislation of the same period federal and state governments have administered marketing orders that determine minimum prices that processors must pay farmers for fluid grade milk these marketing orders have significantly influenced the economic performance of milk markets in this paper we show empirically that marketing orders have helped increase the production of fluid grade milk beyond the demand for fluid milk because the industry is large and the policies have important economic consequences milk marketing orders are among the most studied of all agricultural policies see among others cox and chavas 2001 dobson and salathe 1979 ippolito and masson 1978 kessell 1967 sumner and wolf 1996 this literature has established what have come to be stylized facts of milk marketing orders price discrimination by marketing orders raises the relative price of milk used in beverages fluid milk

external shocks u s monetary policy and macroeconomic fluctuations in emerging markets estimated structural vars show that external shocks are an important source of macroeconomic fluctuations in emerging markets furthermore u s monetary policy shocks affect interest rates and the exchange rate in a typical emerging market quickly and strongly the price level and real output in a typical emerging market respond to u s monetary policy shocks by more than the price level and real output in the u s itself these findings are consistent with the idea that when the u s sneezes emerging markets catch a cold at the same time u s monetary policy shocks are not important for emerging markets relative to other kinds of external shocks

a discrete continuous choice approach to residential water demand under block rate pricing reply waldman is quite correct in noting that the microeconomic theory of block rate pricing in hewitt and hanemann hh 1995 is given for the general case of a k block rate structure whereas the econometric theory is largely confined to the case of exactly two blocks the extension in waldman to the more general case of k blocks is correct although the extension itself could be even more general if it addressed the nonnegativity of demand as is demonstrated below that no apparent attention was paid to the nonnegativity of demand in hh may be attributed to the fact that the need to do so was negated by a fortuitous assumption in the earlier work although that assumption that the errors are multiplicative and lognormally distributed was only maintained and not tested in hh i now estimate two models with the more common assumptions of linear demand and additive and normally distributed errors both with and without a modification for

dynamic and stochastic behavior of coefficient of demand uncertainty incorporated with eoq variables an application in finished goods inventory from general motors dealerships abstract the objective of this paper is to investigate finished goods inventory in the u s automobile industry using an econometric method known as the variable mean response vmr estimation the research uses the classical economic order quantity eoq model as a starting point different from the usual form of the model here we relax certain assumptions inherent to the eoq and treat demand as uncertain rather than deterministic in this research eight models are developed and applied empirically the results of the proposed models and methodology provide inventory decision makers with different managerial implications and strategic improvements overall the empirical results demonstrate many avenues for considering new inventory policies

spatial allocation and the shadow pricing of product characteristics abstract the paper considers an industry transforming primary commodities farm products into processed commodities food products it focuses on the allocation of embedded characteristics carbohydrate protein etc both across space and among commodities the approach generates a spatial competitive market equilibrium of production consumption transformation and trade for both primary and processed commodities along with the spatial distribution of shadow prices for the product characteristics the model provides a basis for analyzing the allocation and pricing of agricultural products food products and characteristics in spatial markets the empirical usefulness of the model is illustrated in the context of regional resource allocation in the u s dairy sector

welfare maximization pricing and allocation with a product performance or environmental quality standard illustration for the gasoline and additives market programming models approximate market prices and quantities when regulations constrain firm choices because market outcomes result when welfare is appropriately defined and includes performance and environmental constraints this study discusses market operation in quality constrained sectors like gasoline and additives processors expand output until marginal processing cost equals the processing margin between product revenues and raw material costs retailers who buy gasoline and additives from processors and sell blended retail gasoline price sales at a marginal cost that includes the blended input value plus adjustments for values of constrained attributes and market supplies and demands of measurable attributes like octane are balanced this method can enhance predictions about the effects of new policies that regulate product quality analysis can now include price and output adjustment in factor and product markets and the competitiveness of new processes and products

comparing solution methods for dynamic equilibrium economies this paper compares solution methods for dynamic equilibrium economies the authors compute and simulate the stochastic neoclassical growth model with leisure choice using undetermined coefficients in levels and in logs finite elements chebyshev polynomials second and fifth order perturbations and value function iteration for several calibrations the authors document the performance of the methods in terms of computing time implementation complexity and accuracy and they present some conclusions about their preferred approaches based on the reported evidence

energy price reform and food markets the case of bread supply chain in iran reforming energy price is the core of iranian economic reform plan during 2010 2014 however increasing price of energy may have adverse effects on the agricultural and food markets this study was conducted to address these problems in the most important food of iranian people bread by developing a spatial supply chain model results show that consumers welfare would experience a sharp decrease though the impacts on farmers are trivial also results indicate that the key to success the reform without political backlash in the short run is the cash transfer program under which the government redistributes part of the reform s benefits among consumers per capita compensation payments would be equal to 51 50 and 46 09 us per year for a typical rural and urban person respectively moreover the results provide more detailed information about the market characteristics and the payments both in nationwide and regional scale as well as in different income groups

price discrimination or price stabilization debating with models of u s dairy policy two views on u s dairy policy are first that it is an instance of the capture theory of economic regulation that it serves the interests of dairy producers at the expense of consumers and taxpayers by raising dairy product prices and second 2 that dairy policy to correct market failure is an instance of governmental action that dairy policy serves the joint interests of producers consumers and taxpayers this paper discusses several analytical issues which have been important in the debate between these views

demand and distributional effects of water pricing policies abstract worldwide water scarcity threatens delivery of water to urban centers water pricing is often recommended to reduce demand in this paper demand and distributional effects of water pricing policies are examined in a block pricing model that is applied to the metropolitan region of sao paulo water demand functions are estimated using marginal and average price models based on monthly data for the period 1997 2002 price elasticities of water demand range between 0 45 and 0 50 and income elasticities between 0 39 and 0 42 for the current combined regressive progressive block price system the poor spend almost 4 2 to 4 7 of their income on water the rich only pay 0 4 to 0 5 of their income whereas they consume more than twice as much a progressive block price or an income dependent price system may result in a more equalized income distribution however the analysis shows that there is a trade off between a more equalized income distribution and revenues earned by the water company more pro poor pricing systems may result as well in lower revenues for the water company

managing credit booms and busts a pigouvian taxation approach we study a dynamic model in which the interaction between debt ac cumulation and asset prices magni es credit booms and busts we nd that borrowers do not internalize these feedback eects and therefore suf fer from excessively large booms and busts in both credit ows and asset prices we show that a pigouvian tax on borrowing may induce borrowers to internalize these externalities and increase welfare we calibrate the model by reference to i the us small and medium sized enterprise sector and ii the household sector and nd the optimal tax to be countercycli cal in both cases dropping to zero in busts and rising to approximately half a percentage point of the amount of debt outstanding during booms

modeling linkages between climate policy and land use an overview agriculture and forestry play an important role in emitting and storing greenhouse gases for an efficient and cost effective climate policy it is therefore important to include land use land use change and forestry lulucf explicitly in economy climate models this article gives an overview and assessment of existing approaches to include lulucf into partial and general equilibrium economy climate models for each class of models we describe different examples their treatment of land and their potential for and applicability to policy analysis as well as their shortcomings we identify data requirements and conceptual problems and provide suggestions for future research

estimation of a composite food demand system for the united states this study develops statistical procedures for computing the parameters of a complete demand system a constrained maximum likelihood method has been applied and parametric restrictions derived from classical demand theory are introduced by a substitution approach the procedures are then applied to u s data for estimating a composite food demand system covering 12 food categories and one nonfood sector

exact consumer s surplus and deadweight loss consumer s surplus is a widely used tool in applied welfare economics both economic theorists and cost benefit analysis often use consumer s surplus despite its somewhat dubious reputation the basic idea is to evaluate the value to a consumer or his willingness to pay for a change in price of a good from say pricep to pricep because price changes affect consumer welfare an evaluation of this effect is often a key input to public policy decisions yet consumer s surplus is probably the most controversial of widely used economic concepts both paul samuelson and ian little conclude that the economics profession would be better off without it it is my feeling of the situation that substantial agreement exists on the correct quantities to be measured the amount the consumer would pay or would need to be paid to be just as well off after the price change as he was before the price change the quantities correspond to john hicks compensating variation measures an alternative measure which takes ex post price change utility as the basis of comparison is hicks equivalent variation the controversy arises in the measurement of these quantities the usual measurement procedure is to use the area to the left of the marshallian market demand curve between two price levels jules dupuit originated this measure of welfare change and alfred marshall and hicks derived appropriate conditions for its use the primary condition for the area to the left of the demand curve to correspond to the compensating variation is to have constant marginal utility of income marshall gave this condition and if it holds the same quantity will be derived as the area to the left of the compensated hicksian demand curve this area to the left of the compensated demand curve is exactly what the compensating variation and equivalent variation measure thus the constant marginal utility of income is a sufficient condition for marshallian consumer s surplus to be equal to hicks consumer s surplus in this case arnold harberger s plea to use the welfare triangle as one half times the product of the price change times the quantity change to measure deadweight loss corresponds to the correct theoretical amount of welfare change in a recent paper robert willig derives bounds for the percentage difference between the correct measure of either the compensating or equivalent variation and the marshallian measure derived form the market demand curve his bounds which depend on the income elasticity of demand for the single good in the region of price change being considered as well as the proportion of the consumer s income spent on the good demonstrate that the marshallian consumer s surplus is often a good approximation to hicks consumer s surplus the fact that the proportion of the consumer s income spent matters as well as the income elasticity was first pointed out by harold hotelling willig contends that the approximation error will be less than the errors involved in estimating the demand curve thus he hopes to remove the need for apology that applied economists often need to give to theorists who remark on the inappropriateness of using marshallian consumer s surplus to measure welfare change however in this paper i show that for the case primarily considered by willig of a single price change which is also the situation in which consumer s surplus is often used in applied work no approximation is necessary professor of economics massachusetts institute of technology and research associate national bureau of economic research i would like to thank peter diamond erwin diewert daniel mcfadden robert merton robert solow hal varian joel yellin and the referees for help and comments research support from the national science foundation is acknowledged the reason that we still have two rather than one of samuelson s six measures of consumer s surplus arises from an index number problem of the correct basis for the welfare comparison i will give both measures but plan to concentrate on the compensating variation

a theoretical and empirical analysis of family migration and household production u s 1980 1985 migration studies have usually focussed on individual persons or workers there has however been some interest in family migration while single individuals in the labor market only have to worry about their own income families where both the husband and wife may be in the labor market need to be concerned with the income of both spouses hence double income families may be less likely to move than single income families jacob mincer 26 develops and explores this hypothesis to be called the tied mover hypothesis the tied mover hypothesis has recently been extended to include not only considerations of the wife s earnings but also considerations of her household production as factors in the family s migration decisions 38 in this paper the research on family migration will be extended in three ways a formal model of household production and family migration will be developed and used to generate testable hypotheses about family migration variables which otherwise would not have a clear economic interpretation are incorporated into the model the model will then be estimated and some policy implications will be discussed one policy implication concerns the efficiency of the labor market labor market efficiency needs to be judged not only in terms of the efficiency of the job search of single individuals but also in terms of the efficiency of the joint job search of double income families this paper is organized into five sections first a comparative static household production model of locational choice is developed 2 next this model of locational choice is used to develop a theoretical model of family migration third the data and empirical model are discussed fourth the empirical results are reported and interpreted in terms of three different types of migration estimates of the impact of selected variables on the distance of the move are also considered the final section summarizes the general findings and offers some policy implications

compensating variation consumer s surplus and welfare the compensating variation was defined by j r hicks 1942 as the amount one would have to deduct from a person s income to make him just as well off after a change in prices and income as he had been in the initial situation if the compensating variation is positive the individual is better off under the new situation since the compensating variation furnishes a uniquely defined numerical cardinal indicator of welfare improvement it provides an implicit ranking of alternative prospective situations not only relative to the initial situation but also relative to each other in practice this appears to be how this and other tools of cost benefit analysis are actually used one is interested in knowing not only whether a particular bridge or a particular excise tax will lead to an improvement in welfare but which out of a set of alternative bridges or alternative tax systems will improve welfare the most 1 in this paper we analyze conditions under which the compensating variation can be validly used in this generalized sense these turn out to be precisely the same as conditions previously derived see our 1976 paper for the valid use of consumer s surplus as a welfare measure in our final section we analyze the problem of deriving the generalized equivalent and compensating variations either exactly or approximately from observable demand functions by means of generalizations of or alternatives to consumer s surplus

regional and temporal impacts of technical change in the u s dairy sector the regional and temporal impacts of technical change in the u s dairy industry are assessed in terms of production and income distribution through a dynamic equilibrium model dynamic duality is used to obtain the production equations the traditional milk producing regions of the northeast and lake states will maintain their base of national output while the pacific region increases its base at the expense of the remaining regions regional dairy income varies temporally advancements in technology are likely to accelerate the treadmill process in agriculture the most dramatic impacts may initially occur in the dairy sector where growth hormones may soon be approved commercially given the anticipated productivity gains and adjustment problems an ex ante assessment of the distributional impacts of new technologies in the dairy sector

tails curtailed accounting for nonlinear dependence in pricing margin insurance for dairy farmers livestock gross margin insurance for dairy cattle lgm dairy is a risk management tool for protecting milk income over feed cost margins in this article we examine the assumptions underpinning the method used to determine lgm dairy premiums analysis of the milk feed dependence structure is conducted using copula methods a rich set of tools that allow modelers to capture nonlinearities in dependence among variables of interest we find a significant relationship between milk and feed prices that increases with time to maturity and severity of negative price shocks extremal or tail dependence is the propensity of dependence to concentrate in the tails of a distribution a common theme in financial and actuarial applications and in agricultural crop revenue insurance is that tail dependence increases the risk to the underwriter and results in higher insurance premiums we present to our knowledge the first case in which tail dependence may actually reduce actuarially fair premiums for an agricultural risk insurance product we examine hedging effectiveness with lgm dairy and show that even in the absence of basis or production risk hedging horizon plays an important role in the ability of this tool to smooth farm income over feed cost margins over time rating methodology that accounts for tail dependence between milk and feed prices extends the optimal hedging horizon and increases hedging effectiveness of the lgm dairy program

regulation in a dynamic market the u s dairy industry an econometric model of the u s dairy market is estimated for the period 1950 80 the economic costs of the dairy program for the period 1965 80 are calculated using ex ante ex post and long run demand and supply functions results indicate that the costs of the dairy program averaged from 430 to 590 million 1980dollars per year depending upon the choice of economic surplus measure the cost estimates depend only slightly on the year that the dairy program is assumed to have been terminated

urban residential demand for water in the united states further discussion using a new model formulation and data from a sample of colorado utilities we investigated the price specification controversy marginal price versus average revenue when estimating residential water demand the improved statistical fit using average

the calculation of research benefits with linear and non linear specifications of the demand and supply reply this paper provides a comparison of research benefits for linear and nonlinear constant elasticity nlce specifications of supply and demand with a pivotal supply shift framework the comparison allows for a sensitivity test of results to different values for demand and supply elasticity the main finding is that the values of the gross annual research benefits calculated for the nlce specification are larger than those calculated for the linear specification with price elastic supply but are smaller with price inelastic supply the analysis suggests that the use of an nlce specification and a pivotal shift due to research is usually preferable to use of a linear supply curve with pivotal shift

are free agents perspicacious peregrinators the perspicacious peregrinator model of solomon w polachek and francis w horvath hypothesizes that individuals decide to migrate based on the size of potential gains this model is tested using themigration decisions of major league baseball players between 1977 and1979 potential gains are measure d as the differ ence between earnings with and without migration a distinction is made between players eligible for free agency and those ineligible so as to a ccount for differences in the level of competition for players services in diff erent segments of this market migration is found tobe related to the expected gain from earnings for players eligible for free agency but not for those ineli gible copyright 1987 by mit press

quota prices as indicators of comparative advantage in supply managed industries the canadian farm products agencies act 2012 requires that comparative advantage be used to guide the allocation of new quota under supply management this requirement however has not been met in practice agricultural economists have proposed several ways of making this legal requirement operational we review and evaluate these proposed approaches and find that quota prices are the only direct measure of comparative advantage in supply managed industries we develop an agent based general equilibrium model of quota exchange to illustrate the use of quota prices as indicators of comparative advantage our approach complements the proposal by meilke 2009 to use quota prices as indicators of comparative advantage in supply managed industries and also addresses the concerns of larue and gervais 2008 that quota prices may not be theoretically consistent with comparative advantage we also discuss potential practical challenges of using quota prices as indicators of comparative advantage in the canadian supply managed industries finally we provide an example of calculating provincial shares of new quota using recent quota price data according to two prototype decision rules this abstract was borrowed from another version of this item

tracing the evolution of the aggregate u s milk supply elasticity using a herd dynamics model the u s dairy sector is characterized by increasing volatility of milk prices and consolidation in production as evidenced by declining number of dairy farms with an increasingly larger share of milk supplied from a small number of very large farms using aggregate national data we build a mixed frequency herd dynamics econometric model of the u s milk supply that updates and substantially amends the model first proposed by chavas and klemme we implement a dynamic residual based bootstrap technique that can be used in testing for changes in nonmarginal simulated long run supply responsiveness and trace the evolution of long run milk supply elasticity from 1975 through 2010 several papers in the past have suggested that long run supply elasticity increases with dairy farm size which implies that increased importance of large farms would increase aggregate long run supply responsiveness contrary to this conclusion we find a declining trend in long run supply elasticity from 1975 through 2005 persistence of such a decline would be a major cause for worry as ever larger price swings would be needed to equilibrate the market in face of demand shocks however we find that milk supply is becoming more responsive since 2005 both to milk and feed price changes increasing responsiveness to feed prices further justifies focusing the next generation of the dairy policy instruments on managing dairy profit margins rather than just revenue streams

homogeneity and supply supply functions in the ubiquitous gorman class are examined for their homogeneity properties homogeneity places surprisingly strong restrictions on functional forms these forms facilitate testing of aggregability given homogeneity or homogeneity given aggregability or testing both

lin b jiang z 2012 designation and influence of household increasing block electricity tariffs in china energy policy 42 pp 164 173 how biased is the measurement of household s loss abstract the three tier inclining block tariff ibt issued by the chinese government in 2010 is focusing attention of energy economists among whom lin and jiang 2012 designation and influence of household increasing block electricity tariffs in china energy policy 42 164 173 who assert that the issued tariff is unsuited to meet the social and environmental objectives it was designed for these authors offer an alternative four tiered ibt the performance of which they show by evaluating its welfare and income distribution effects taking the current uniform tariff as reference to measure the surplus loss to a representative household in a given block the authors use the trapezoid approach but because of the limited data on demand they calculate the household s response by using a constant point estimate of the own price elasticity of electricity demand in this note i show there is an incompatibility between these two modeling assumptions combining them is causing an upward bias in the surplus loss which is of significance given the large price change associated with the ibt i then offer a correction to this bias

macroprudential policy in the presence of external risks abstract we document the relevance of external risks shocks to the level and volatility of world interest rates in shaping economic activity in emerging market economies emes and characterize optimal macroprudential policy in response to these risks in a small open economy subject to financial crises low and stable interest rates reinforce overborrowing arising from a pecuniary externality generated by collateral constraints that depend on asset prices we show that this mechanism leads to greater exposure to crises typically accompanied by abrupt increases in interest rates and a persistent rise in their volatility as observed during sudden stops in emes a tax on international borrowing that implements a social planner s optimal policy can be decomposed into three factors the severity of future crises the ability of the planner to dampen future crises and the incidence of future crises we show that the effects of interest rate volatility on these factors implies that qualitatively the tax responds non monotonically with respect to the direction of volatility shocks and that quantitatively increasing macroprudential taxes is seldom the optimal response to an increase in interest rate volatility

efficiency and equity in natural resources pricing a proposal for urban water distribution service this paper focuses on the design of optimal prices for urban water distribution service in this context pricing should be aimed at achieving efficiency equity financial aspects and or public acceptability and transparency the proposed tariffs are based on the theoretical frameworks suggested by ramsey 1927 and feldstein 1972 as a prior step estimations of urban water demands and water costs are carried out for the spanish municipality of seville finally an empirical comparison in welfare terms is conducted between the proposed tariffs and those applicable in the year 2000

an interregional analysis of price discrimination and domestic policy reform in the u s dairy sector the u s dairy sector has experienced several reforms in both government price support and classified pricing under state and federal milk marketing orders an interregional spatial market equilibrium model of the u s dairy sector is used to provide quantitative measures of the aggregate and regional impacts of alternative domestic deregulation scenarios the model simulates the allocation of farm milk used in the production of nine dairy products in a way consistent with milk component balances for milk fat protein and carbohydrate both within and across regions results suggest current policies induce substantive aggregate and regional distortions relative to an unregulated policy

evaluating the welfare effects of reforming municipal water prices abstract despite the strong criticisms by economists of water utility pricing practices and the presence of well articulated theoretical models of efficient pricing alternatives few empirical studies have documented the magnitude of the efficiency gains from altering water prices the structures of water supply costs and water demands are estimated using data from vancouver canada a simulation program uses these estimated relationships to compute the impact upon a representative water utility s output and deficit and upon aggregate consumer surplus of a move from its current practice to efficient prices simulation results show that a move to seasonally differentiated pricing with an annual charge calculated to recoup the resulting deficit raises aggregate surplus by approximately 4 this result contrasts with recent water pricing studies that found welfare improvements of approximately 1

water demand under alternative price structures we estimate the price elasticity of water demand with household level data structurally modeling the piecewise linear budget constraints imposed by increasing block pricing we develop a mathematical expression for the unconditional price elasticity of demand under increasing block prices and compare conditional and unconditional elasticities analytically and empirically we test the hypothesis that price elasticity may depend on price structure beyond technical differences in elasticity concepts due to the possibility of endogenous utility price structure choice observed differences in elasticity across price structures may be due either to a behavioral response to price structure or to underlying heterogeneity among water utility service areas

optimal time consistent macroprudential policy collateral constraints widely used in models of financial crises feature a pecuniary externality agents do not internalize how borrowing decisions made in good times affect collateral prices during a crisis we show that under commitment the optimal financial regulator s plans are time inconsistent and study time consistent policy quantitatively this policy reduces sharply the frequency and magnitude of crises removes fat tails from the distribution of asset returns and increases social welfare in contrast constant debt taxes are ineffective and can be welfare reducing while an optimized macroprudential taylor rule is effective but less so than the optimal time consistent policy

the econometrics of nonlinear budget sets traditional empirical analysis of consumer demand has usually made the assumption of linear budget sets that is the consumer is assumed to purchase any desired quantity at a constant price subject to a budget constraint the major exception to this framework is the analysis of demand when some goods are rationed 2 in the rationed case the price is constant up to a quantity limit in contrast to the rationed case here i consider the situation where the price varies with the amount of the good purchased empirical situations with nonconstant prices come readily to mind and of course they have received much recent attention from theorists since mirrlees 44 paper on optimal nonlinear taxation the following examples are meant to give a partial listing of cases when nonlinear budget sets occur i electricity prices many electric utilities engage in declining block pricing that is the marginal price of successive kwh s of electricity decrease at a given number of points determined by total demand thus the budget set is piecewise linear houthakker 36 was the first to propose an approach to this problem taylor 51 analyzes the problem at length and hausman kinnucin and mcfadden 31 use an instrumental variables estimator to provide consistent estimates of the demand function

comparing residential water demand estimates under decreasing and increasing block rates using household data using a new model formulation and data from a sample of colorado utilities we investigated the price specification controversy marginal price versus average revenue when estimating residential water demand the improved statistical fit using average

welfare and distribution effects of water pricing policies in this paper distribution and welfare effects of changes in block price systems are evaluated a method is discussed to determine for a marshallian demand function equivalent variation in case of a block price system the method is applied to compare for the metropolitan region of sao paulo alternative pricing policies on the basis of their demand welfare and distribution effects of changing water prices results show that there is a trade off between average welfare and income distribution a pro poor price system may result in lower average welfare than a flat price system but in higher individual welfare for the poor moreover there is a trade off between revenues for the water company and income distribution even though pro poor price systems may not be as good for average welfare as flat price systems their direct effects on poverty are important introducing pro poor price systems however may have financial consequences for the water companies

an analysis of 1980s dairy programs and some policy implications excessive government purchases of dairy surpluses during the early 1980s prompted three corrective measures the milk diversion program dairy termination program and lower support prices an eight equation econometric model of the dairy sector simulates these programs and shows them to be incomplete or impermanent in their effects however further analysis shows that a more aggressive policy of lower support prices would be effective in reducing costs to government and consumers and lowering transfers to producers

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

labor force migration and allocative efficiency in the united states the roles of information and psychic costs this paper examines the relative importance of information psychic and other costs of relocation as mitigating factors off sets to spatial earnings differentials within the migration decision the method employed for this examination is based upon 1 observation of relationships between the geographic allocation and personal characteristics of labor force migrants and 2 inferences drawn from these observations about the relative importance of various relocation cost components empirical analyses of the migration decision based upon this indirect method provide important insights on both the determinants and allocative efficiency of interstate labor force migration in the united states excerpt

quotas without supply control effects of dairy quota policy in california unlike the federal milk marketing order system california s system includes a milk quota program oddly this quota restricts neither production nor marketing in aggregate the quota program leads to more milk production than a typical marketing quota but less milk than blend pricing without the quota the california program generates more producer surplus and smaller welfare losses than a federal style program without quota when class 1 milk sales expand production expands less under the quota program than with blend pricing without a quota finally increases in aggregate quota lower production because they lower the marginal price of milk facing producers

the effects of variable omission in the travel cost technique the travel cost technique is probably the most widely used method for estimating outdoor recreation demand functions consequently problems of specification have attracted much attention specification errors due to the omission of travel time and congestion effects have received the most recent attention with the consensus being that the travel cost technique underestimates the true value of recreational resources if these variables are omitted gum and martin 1975 wetzel 1977 mcconnell and duff 1976 yet the effect of variable omission is likely to vary depending upon the type of activity the existence of substitutes and related factors for this reason we reexamine from both an empirical and theoretical perspective the magnitude and nature of potential specification errors due to variable omission

regime switching in emerging market business cycles interest rate volatility and sudden stops abstract we document the presence of discrete regime switching in emerging market business cycles particularly in the volatility of interest rates at which countries borrow internationally using a multi country regime switching vector autoregressive model we study the statistical relationship of such business cycle regimes with episodes of sudden stops periods of high volatility tend to be persistent and are associated with high interest rates the occurrence of sudden stops in external financing and large declines in economic activity most strikingly we show that regime switches drive the countercyclicality of interest rates in emerging markets documented in previous literature neumeyer and perri 2005 and that high volatility regimes forecast sudden stops 6 and 12 months ahead

dynamics of beef cow herd size an inventory approach cow herd inventories are the primary determinant of beef supply the principal decisions determining inventories are studied in a dynamic framework short run and long run impacts of one time shocks in economic factors influencing culling and replacement decisions are estimated via simulations changes in economic factors have the greatest impact on younger members of the herd these changes have long term impacts on inventories through their influence on age dynamics impacts on age dynamics could influence the cattle cycle

price and income elasticities of residential water demand a meta analysis this article presents a meta analysis of variations in price and income elasticities of residential water demand meta analysis constitutes an adequate tool to synthesize research results by means of an analysis of the variation in empirical estimates reported in the literature we link the variation in estimated elasticities to differences in theoretical microeconomic choice approaches differences in spatial and temporal dynamics as well as differences in research design of the underlying studies the occurrence of increasing or decreasing block rate systems turns out to be important with respect to price elasticities the use of the discrete continuous choice approach is relevant in explaining observed differences

factor endowments heterogeneous labor and north south migration the relationship between the relative factor endowments of heterogeneous labor in the north and south of the united states and interregional labor migration is examined the purpose of the present paper is to make explicit a sufficient set of conditions that will support a factor endowment based migration model and to evaluate the advantages and weaknesses of that model the models predictions are tested using data from the 1970 census excerpt

functional forms exogenous shifts and economic surplus changes conditions for exact welfare measures in equilibrium displacement modeling are examined these relate to the functional form of supply and demand the nature of the exogenous shift and the definition of percentage changes approximation errors when these conditions are not met in empirical applications are investigated and analytical expressions for the errors derived significant errors are possible when a proportional shift is assumed the assumptions underlying alston and wohlgenant s empirical findings are identified the restriction that supply must be elastic is shown to be unnecessary

the long run performance of increasing block pricing in taiwan s residential electricity sector abstract this article examines the performance regarding efficiency and equity of increasing block pricing ibp in taiwan s residential electricity sector by using long term nationwide household data 1999 2014 actual variations in ibp rate structure are explored empirical results show that cross subsidization under ibp have resulted in inefficient over consumption by the poor and inefficient under consumption by the rich in addition the financial burden increased with decreases of household s income levels and a relatively high percentage of subsidies mistakenly went to non poor households the upward price adjustments and broadened first block in recent years have increased the household s financial burden and the rates of wrongly excluding the poor and wrongly including the rich to enjoy the subsidy being unable to take family size into consideration and send correct price signals to all users are two serious problems for ibp which may hinder the achievement of equity and efficiency in electricity use

evidence on the specification of price in the study of domestic water demand the development of lakefront property in northern wisconsin has prompted in several towns minimum frontage zoning stricter than the state standard such zoning generates an economic loss by constraining development development effect and an economic

linear demand functions in theory and practice abstract integrability conditions for an incomplete system of linear demand functions are considered the parameter restrictions consistent with integrability are identified and the structure of the conditional preference map is obtained it is found that the conditional preferences for a set of linear demand functions are either quadratic or leontief from a translated origin welfare analysis with linear demand models is also considered

genetic improvements in major us crops the size and distribution of benefits the distribution of welfare gains of genetic improvements in major us crops is estimated using a world agricultural trade model multi market welfare estimates were 75 larger than estimates based on the price exogenous change in revenue method frequently used by plant breeders annual benefits of these genetic improvements range from us 400 600 million depending on the supply shift specification of this 44 60 accrues to the us 24 34 accrues to other developed countries developing and transitional economies capture 16 22 of the welfare gain the global benefits of a one time permanent increase in us yields are us 8 1 billion discounted at 10 and us 15 4 billion discounted at 5 gains to consumers in developing and transitional economies range from us 6 1 billion 10 discount rate to us 11 6 billion 5 discount rate

potential for pricing policies in water resource management estimation of urban residential water demand in zaragoza spain this paper presents an empirical study to estimate the urban residential water demand in zaragoza spain this allows the testing of the short run sensitivity of water demand to changes in a set of

life on the frontier migrant information earnings and past mobility this paper examines the extent to which information obtained from past geographic mobility affects both post move job search and earnings in subsequent migration in the united states the study considers this linkage between past and present mobility by estimating earnings frontiers for various categories of interstate migrants partitioned by prior mobility history the results demonstrate that migrant groups exhibiting high relative levels of human capital stock do not necessarily possess superior pre move labor market information it is also demonstrated that the incentive to acquire this pre move information is tied to psychic cost and variation in this cost among migrant types excerpt

structural change in the demand for meat economists have long thought that shocks in the economy sometimes lead to permanent changes in behavioral relationships hence supply or demand elasticities estimated from econometric models may change over time the source of such structural change may be technological adoption a shift in consumer preferences or an institutional change one way to handle this problem in linear models is to allow the parameters to change as the situation changes so that the model provides a local approximation of the behavioral relationship this approach is an attractive way to deal with structural change problems econometricians have extended the classical

home economic conditions and the decision to migrate new evidence for the u s labor force labor force response to differential economic conditions across space has received considerable attention within the economic literature on labor mobility and migration based upon research on this topic described within survey articles by greenwood 6 ritchey 20 and shaw 23 a consensus has developed namely that the level and propensity of labor force out migration from an area are unaffected by economic conditions within that area on the other hand demographic characteristics of the resident population and economic conditions outside the area are commonly believed to have significant influence on both the magnitude and direction of this outflow this apparent economic paradox was supported by early work of perloff et al 19 lowry 14 and lansing and mueller 10 although a significant exception appeared in a later study by miller 17 recent econometric studies have in general reconfirmed this paradox for instance graves 5 234 found results for origin economic conditions that run counter to the usual expectations levy and wadycki 12 present origin economic variables that are either insignificant or of wrong sign finally in one of the most recent and comprehensive studies of place to place migration fields 3 27 concludes that in