the allocation of inventory risk in a supply chain push pull and advance purchase discount contracts while every firm in a supply chain bears supply risk the cost of insufficient supply some firms may even with wholesale price contracts completely avoid inventory risk the cost of unsold inventory with a push contract there is a single wholesale price and the retailer by ordering his entire supply before the selling season bears all of the supply chain s inventory risk a pull contract also has a single wholesale price but the supplier bears the supply chain s inventory risk because only the supplier holds inventory while the retailer replenishes as needed during the season examples include vendor managed inventory with consignment and drop shipping an advance purchase discount has two wholesale prices a discounted price for inventory purchased before the season and a regular price for replenishments during the selling season advance purchase discounts allow for intermediate allocations of inventory risk the retailer bears the risk on inventory ordered before the season while the supplier bears the risk on any production in excess of that amount this research studies how the allocation of inventory risk via these three types of wholesale price contracts impacts supply chain efficiency the ratio of the supply chain s profit to its maximum profit it is found that the efficiency of a single wholesale price contract is considerably higher than previously thought as long as firms consider both push and pull contracts in other words the literature has exaggerated the value of implementing coordinating contracts i e contracts that achieve 100 efficiency such as buy backs or revenue sharing because coordinating contracts are compared against an inappropriate benchmark often just a push contract furthermore if firms also consider advance purchase discounts which are also simple to administer then the coordination of the supply chain and the arbitrary allocation of its profit is possible several limitations of advance purchase discounts are discussed

excise taxes with multiproduct transactions i examine excise taxes levied on multiproduct retailers excise taxes reduce equilibrium output and decrease equilibrium product variety in the short run but taxes can raise output per product in the long run and induce entry excise taxes are overshifted into prices in a wide range of cases including under linear and concave demand conditions and excise taxes shift less than one for one into prices only when demand is highly convex multiproduct transactions substantively alter the efficiency of ad valorem and specific forms of excise taxes and affect the comparison of relative tax performance over short run and long run time horizons jel h25 h32 l11 l13 l81

asymmetry in retail wholesale and shipping point pricing for fresh vegetables the linkage among retail wholesale and shipping point prices for a select group of fresh vegetables is measured using wolffram s asymmetry model procedures for dealing with discontinuous time series are shown and granger s causality test is used to show the direction of the price linkage wholesale prices are shown to lead both retail and shipping point prices asymmetry in the retail wholesale response indicates that wholesale price decreases are reflected at the retail more so than are wholesale price increases wholesale price decreases are more fully passed through to the shipping point relative to wholesale increases

small and large stakes risk aversion implications of concavity calibration for decision theory abstract a growing literature reports the conclusions that a expected utility theory does not provide a plausible theory of risk aversion for both small stakes and large stakes gambles and b this decision theory should be replaced with an alternative theory characterized by loss aversion this paper explains that the arguments in previous literature fail to support these conclusions either concavity calibration has no general implication for expected utility theory or it has problematic implications for all decision theories that involve concave transformations utility or value functions of positive money payoffs which makes loss aversion irrelevant to the argument

demand information and competition why do food prices fall at seasonal demand peaks prices for seasonal food products fall at demand peaks price declines are not driven by falling agricultural input prices indeed farm to retail margins narrow sharply i use electronic scanner data from a sample of us supermarkets to show that seasonal price declines are closely linked to market concentration and are much larger in markets with several rivals than where a single brand dominates seasonal demand increases reduce the effective costs of informative advertising and increased informative advertising by retailers and manufacturers in turn may allow for increased market information and greater price sensitivity on the part of buyers

competitive storage rational expectations and short run food price determination this paper demonstrates that lags between retail and wholesale food prices can be explained by inventory behavior of retailers theoretical considerations indicate that the markup model should be modified to include a jorgenson type user cost variable which depends on expected future wholesale price the rational expectations hypothesis is used to derive price expectations the retail price specification therefore depends on the stochastic process generating expected wholesale price the econometric methodology employing both causality testing and nonlinear estimation is illustrated by estimating monthly price relationships for beef the results are consistent with the theory and indicate rejection of the markup model

commodity price pass through and inflation regimes abstract does an increase in the energy and commodity prices drive consumer prices the energy and commodity markets affect the inflation process through international trade this poses policy implications for monetary policy to forecast inflation and also smooth the impact of international relative price movements we investigate the pass through of a broad range of agricultural and energy commodity prices to inflation across different inflation regimes our distinctive regime varying methodology captures asymmetric response of inflation to the world commodity prices we establish the first evidence of the pass through of commodity prices to inflation across different periods of low and high inflation regimes and also stable and unstable inflation regimes the results show that the duration of staying in an unstable inflation regime is smaller in the commodity markets both short run and long run pass through of agricultural food and energy commodities are higher compared to other commodities the energy commodity particularly drives the inflation process for advanced economies emerging economies and also the european union countries overall the dynamics of inflation and commodity prices change in the inflation environment pointing to implications for conducting optimal monetary policy

social preferences under risk equality of opportunity versus equality of outcome this paper axiomatizes a utility function for social preferences under risk in the model a single parameter captures a preference for equality of opportunity i e equality of exante expected payoffs relative to equality of outcome i e equality of ex post payoffs in a deterministic environment the model reduces to the model of fehr and schmidt 1999 the model is consistent with recent experiments on probabilistic dictator games

a probit latent variable model of nutrition information and dietary fiber intake nutrition information and intake data for a sample of u s household meal planners are used to estimate the effects of fiber specific information on dietary fiber intake the information variables are measured using survey questions on fiber content of foods attitude toward consuming fiber rich foods and awareness of fiber health links the evidence confirms the influence of nutrition information on fiber intake household income meal planner age smoking status vegetarian status race and ethnicity are major determinants of both information and intake education exerts a sizable intake effect by enhancing the information level direct and indirect effects of exogenous variables are reported

threshold cointegration and spatial price transmission when expectations matter we examine the performance of the threshold cointegration approach specifically band tvecm to price transmission analysis in an explicit context where trade decisions are made based on expectation of final prices because trade takes time we find that following a standard inference strategy a large portion of three regime cases are not identified as such results show that transfer costs are systematically underestimated particularly in three regime models the speed of price transmission is also biased in three regime models furthermore inferences about occurrence of trade are poor with estimated models suggesting far lower market integration than is true in the data generating process

vertical price transmission in the egyptian tomato sector after the arab spring this study assesses price transmission along the egyptian tomato food marketing chain in the period that followed the arab spring which accentuated economic precariousness in egypt static and tim

market integration and price transmission in consumer markets of developing countries abstract world prices for agricultural commodities surged in 2006 08 and then again in 2011 12 in many developing countries consumer prices for staple foods such as bread and rice mirrored these movements this paper examines whether prices in urban consumer markets within developing countries are co integrated with prices in world agricultural commodity markets using a single equation error correction model we examine the response of consumer prices for wheat rice maize and sorghum to changes in world market prices and exchange rates in urban centers of the developing world analyzing over 60 country commodity pairings we find that developing countries consumer markets are co integrated with world markets yet we also find that the transmission of changes in both world prices and real exchange rates to domestic consumer prices is not high and that the movement of domestic consumer prices to new equilibrium with world prices after a shock to the latter is relatively slow

risk aversion and bargaining some preliminary results game theoretic models of bargaining can be thought of as falling into two broad classes a uiomatic and strategic i in all of these models the preferences of the bargainers are represented by their von neumann morgenstern utility functions a series of recent experiments has shown that these models lack descriptive power in a number of important respects in particular very clear focal point effects have been observed of a kind that will be described in somewhat more detail below that cannot be accounted for within the framework of these classical game theoretic models at the same time the success of these classical models in the theoretical economics literature rests on the intuitively appealing qualitative predictions that they make in a variety of circumstances some of these qualitative predictions may prove to have descriptive power even though other aspects of the same model do not since these models are stated in terms of the von neumann morgenstern utilities of the bargainers their qualitative predictions are inevitably involved with the bargainers risk postures

price transmission across the u s food distribution system price transmission models are estimated using recursive methods across 100 food commodities from the individual commodities short and long run price transmission coefficients are estimated for rising and falling prices these coefficients are classified into five commodity categories and expressed as one vector while coding for causality market levels rising falling prices short and long run and time period then the impact of each variable is estimated and inferences are drawn about the degree of price transmission results show that price linkages are strong but slightly declining over time with some evidence of asymmetric behavior long run rising prices are passed through more than long run falling prices except for fruits and vegetables

consumer demand for nutrition versus taste in four major food categories this study addresses the trade off between nutrition and taste in expenditure on breakfast cereal milk bread and soft drinks within each category products have similar cost and convenience but have markedly different flavor and nutritional content using annual expenditure data for a large sample of households participating in the acnielsen homescan system we regress a measure of healthiness on household demographics and market prices and find that households with college educated heads and higher incomes made significantly healthier choices in all four categories these effects are puzzling in that the nutritional differences between products were well known to consumers and there are no cost or convenience differences between them the presence of children was associated with less healthy choices especially for cereal and bread while older households made healthier choices in all categories except milk

just luck an experimental study of risk taking and fairness choices involving risk significantly affect the distribution of income and wealth in society this paper reports the results of the first experiment to our knowledge to study fairness views about risk taking specifically whether such views are based chiefly on ex ante opportunities or on ex post outcomes we find that even though many participants focus exclusively on ex ante opportunities most favor some redistribution ex post many participants also make a distinction between ex post inequalities that reflect differences in luck and ex post inequalities that reflect differences in choices these findings apply to both stakeholders and impartial spectators

asymmetry and rigidity in farm retail price transmission this article demonstrates how retail price transmission asymmetry can arise from intertemporal optimizing behavior among spatially competitive retailers facing concave spatial demand and shows that vigorous competition among retailers may not necessarily result in the larger retail price declines farmers expect during periods of declining farm prices it also shows that when this particular class of retailers incurs repricing costs retail prices can be rigid over a range of upward and downward movements in the farm price this suggests that the rigidity of retail prices during periods of declining farm prices could be due to repricing costs it also suggests that the appropriate econometric model of price transmission is the model of friction where tobit analysis is the proper method of estimation rather than nonreversible functions

an experimental study of precautionary bidding auctions often involve goods exhibiting a common knowledge ex post risk in such auctions precautionary bidding predicts that under expected utility dara bidders reduce their bids by more than the appropriate risk premium because the degree of riskiness of an auctioned good and bidders levels of risk aversion are difficult to observe in field settings we conduct experimental auctions that allow us to identify the precautionary premium directly we find strong evidence for precautionary bidding the effect is robust to changes in experimental design features our experiment provides the first empirical demonstration of precautionary motives in a strategic setting

consumer knowledge and meat consumption at home and away from home we investigate the roles of consumer knowledge and sociodemographic factors in the consumption of meat products at home and away from home censored dependent variables and endogenous dietary knowledge are accommodated by developing and estimating a simultaneous equations system results suggest endogeneity of knowledge and support the system approach to demand functions for meat products dietary knowledge decreases consumption of beef and pork at home and away from home but does not affect poultry or fish consumption in either location men eat more meat and fish than women meat consumption declines with age and regional and racial ethnic differences are present published by elsevier ltd

asymmetry in farm retail price transmission for major dairy products an econometric model is used to estimate the net relationship between changes in the farm level price of milk and changes in the retail prices of four major dairy products fluid milk butter cheese and ice cream results indicate that the farm retail price transmission process in the dairy sector is asymmetric retail dairy product prices adjust more rapidly and more fully to increases in the farm price of milk than to decreases the role in pricing asymmetry of retail demand versus farm supply shifts is tested via a chow type test asymmetry is tested using the houck procedure for estimating nonreversible functions

investigation of production sales and inventory relationships using multicointegration and non symmetric error correction models the accumulated sum of a stationary series is called integrated if a linear combination of some of the integrated series is stationary it is said to be cointegrated this paper presents empirical results on inventories to consider the possibility of a deeper form of cointegration called multicointegration which is introduced in granger and lee 1989 a vector integrated series is multicointegrated if the accumulated sum of its stationary cointegrated linear combination is again cointegrated with itself inventory which is the accumulated sum of production minus sales is probably cointegrated with production and sales the empirical results generally support the presence of multicointegration of production and sales in many u s industries and industrial aggregates the results also favour the non symmetric error correction model providing evidence that the strength of attraction is different on both sides of the attractor a modified s s rule for inventory control is investigated in the context of a non symmetric error correction model and the results generally do not support the s s rule sufficient evidence is found to conclude that multicointegration is a useful concept in the area of inventory determination

on the heterogeneous welfare gains and losses from trade how are the gains and losses from trade distributed across individuals within a country first we document that tradable goods constitute a larger fraction of expenditures for poor households second we build a trade model with nonhomothetic preferences to generate the documented relationship between tradable expenditure shares income and wealth and uninsurable earnings risk to generate heterogeneity in income and wealth third we use the calibrated model to quantify the differential welfare gains and losses from trade along the income and wealth distribution in a numerical exercise we permanently reduce trade costs so as to generate a rise in import share of gdp commensurate with that seen in the data from 2001 to 2014 we find that households in the lowest wealth decile experience welfare gains over the transition measured by permanent consumption equivalents that are 67 percent larger than those in the highest wealth decile

consistency of higher order risk preferences risk aversion a second order risk preference is a time proven concept in economic models of choice under risk more recently the higher order risk preferences of prudence third order and temperance fourth order also have been shown to be quite important while a majority of the population seems to exhibit both risk aversion and these higher order risk preferences a significant minority does not we show how both risk averse and risk loving behaviors might be generated by a simple type of basic lottery preference for either 1 combining good outcomes with bad ones or 2 combining good with good and bad with bad respectively we further show that this dichotomy is fairly robust at explaining higher order risk attitudes in the laboratory in addition to our own experimental evidence we take a second look at the extant laboratory experiments that measure higher order risk preferences and we find a fair amount of support for this dichotomy our own experiment also is the first to look beyond fourth order risk preferences and we examine risk attitudes at even higher orders

cost pass through in differentiated product markets the case of u s processed cheese in this paper we estimate a mixed logit model for demand in the u s processed cheese market the estimates are used to determine pass through rates of cost changes under different behavioral regimes we find that under collusion the pass through rates for all brands fall between 21 and 31 while under nash bertrand price competition the range of pass through rates is between 73 and 103 the mixed logit model provides a more flexible framework for studying pass through rates than the logit model since the curvature of the demand functions depends upon the empirical distribution of consumer types

risk aversion and expected utility theory a calibration theorem within the expected utility framework the only explanation for risk aversion is that the utility function for wealth is concave a person has lower marginal utility for additional wealth when she is wealthy than when she is poor this paper provides a theorem showing that expected utility theory is an utterly implausible explanation for appreciable risk aversion over modest stakes within expected utility theory for any concave utility function even very little risk aversion over modest stakes implies an absurd degree of risk aversion over large stakes illustrative calibrations are provided

measuring market power in the ready to eat cereal industry the ready to eat cereal industry is characterized by high concentration high price cost margins large advertising to sales ratios and numerous introductions of new products previous researchers have concluded that the ready to eat cereal industry is a classic example of an industry with nearly collusive pricing behavior and intense nonprice competition this paper empirically examines this conclusion in particular i estimate price cost margins but more importantly i am able empirically to separate these margins into three sources i that which is due to product differentiation ii that which is due to multi product firm pricing and iii that due to potential price collusion the results suggest that given the demand for different brands of cereal the first two effects explain most of the observed price cost margins i conclude that prices in the industry are consistent with noncollusive pricing behavior despite the high price cost margins leading firms are able to maintain a portfolio of differentiated products and influence the perceived product quality it is these two factors that lead to high price cost margins

bargaining with a residual claimant an experimental study we conduct an experiment of two player bargaining in which the payo to one player is subject to ex post risk while the other player receives a xed payment eectively making the player exposed to risk a residual claimant contrary to intuition recent theoretical work argues that exposure to risk may actually be benecial to the residual claimant and we test this in a controlled lab experiment our results suggest that asymmetric exposure to risk creates dierent self serving notions of fairness for the two types of players which leads to bargaining conict and even disagreements residual claimants are able to extract a larger share of the pie when bargaining over a risky distribution moreover some residual claimants actually do better in an expected utility sense by being exposed to risk however contrary to the theoretical prediction it is the comparatively less risk averse residual claimants who appear to benet the most through their exposure to risk in a subsequent study where residual claimants are able to choose between a less risky or a more risky distribution over which to bargain few choose the riskier distribution except when the possibility of an ex pose fair split exists consistent with our earlier results the relatively less risk averse residual claimants are more likely to choose the riskier distribution

factors affecting the timing of purchasing of butter margarine and blends a competing goods analysis the purchase dynamics of a subset of food fats and oils are investigated using event history analysis applied to a panel of u s households the consumer behavior examined is the switching between purchases of butter margarine and butter margarine blends across purchase occasions we find that price previous purchases seasonality and household size and composition affect product switching probability

a note on the effect of cost changes on prices in a recent article in this journal sumner 1981 took an ingenious approach to estimating the level of monopoly power in the cigarette industry he noted that differences in marginal costs exist in the industry due to varying levels of state taxes the sales prices established will satisfy the equation p i liq l mr mc where p price and q the elasticity of demand for the product in question if elasticity is a constant observing the change in marginal cost and the change in price enables one to infer the elasticity of demand perceived by the firm elasticity could then be used as a proxy for the firm s market power this technique turns out to be of very limited applicability however because it is extremely sensitive to the functional form assumed for the demand curve consider the general problem of a firm facing constant marginal costs of c in maximizing profits the firm solves

will developing country nutrition improve with income a case study for rural south india aggregate estimates of food expenditure are consistent with such a possibility implying income expenditure elasticities close to one however the high degree of aggregation at which such estimates are made means that the considerable increase in price per nutrient as income increases is ignored and the nutrient elasticities are therefore overstated estimates for a rural south indian sample indicate that this bias is considerable and that the true nutrient elasticities with respect to income may be close to zero

health and wage a simultaneous equation model with multiple discrete indicators in this article we propose all econometric approach for estimating the simultaneouls effects of health and wages in a structural equations framework in the theoretical works of grossmana 1972a 1972b health is viewed as anl elldogen1oulsly determined capital stock the demand for health should rise with the wage rate as the rate of return to health investment increases with wage onl the other hand better health should raise market productivity and hence wages since health capital is an abstract theoretical concept it can hardly be measured quantitatively however most population surveys include various health indicators these indicators are usually discrete variables in the empirical work of grossman and benham 1974 these qualitative indicators are treated as continuous variables and two stage least squares estimation techniques are used this specification raises various econometric problems see e g goldberger 1964 pp 248 255 domencich and mcfadden 1975 and nerlove and press 1973 a satisfactory specification should take into account the discrete nature of the indicators our specification generalizes the dummy variables simultaneous equations system of heckman 1978 the measurement models of joreskog and goldberger 1975 and is closely related to the models of muthe n 1976 1979 muthen studies full information maximum likelihood procedures for estimation except for very simple cases this does not generally yield feasible or tractable procedures in this article we introduce a tractable procedure for statistical estimation and testing this specification and the estimation procedure is then applied to study the joint dependence of health and wages another departure of our approach from others is that we will test and correct the possible incompatibility of the various health capital indicators in the population surveys one may have subjective health indicators such as self evaluation of health which may reflect different populations perception of health we propose a statistical procedure for testing measurement compatibility and if required for correcting this problem this article is divided into two parts initially we describe the model specification estimation and statistical tests in a general simultaneous equation model with multiple discrete indicators in the second part of the paper we consider specification of a simultaneous equation model for health and wages the model

do the poor pay more for food evidence from the united kingdom does food cost more for low income households this paper compares two well known approaches to answering this question i find that quantity discounts for a broad range of foods are statistically significant and economically important however quantity discounting does not lead to the poor paying more for food i find that the poor pay less than average for the food they purchase this is explained by the poor spending a greater share of their income on foods where quantity discounting occurs copyright 2010 oxford university press

world market integration for export and food crops in developing countries a case study for mali and nicaragua using a generalized error correction model this article measures and compares market integration for export cash crops versus imported food crops for mali and nicaragua and computes transmission elasticities between changes in the goods border and domestic prices both mali and nicaragua obtain the bulk of their export revenue from a particular agricultural commodity cotton for mali and coffee for nicaragua and both import the same key staple food of rice to reap the economic gains from this trade specialization the two countries agriculture must be well integrated into world markets the two countries present an important policy contrast that affects their degree of world market integration and price transmission in mali a parastatal enterprise controls its cotton industry while nicaragua has less state direction over agriculture reflecting this difference the results show that for both its main export and import commodity nicaragua is more integrated into world markets and has higher price transmission than mali the results for nicaragua also show much higher integration and price transmission for its main agricultural export coffee than its major import rice

higher order risk attitudes a review of experimental evidence abstract this paper reviews the recent but fast growing experimental literature on higher order risk attitudes after introducing the theoretical context we first review the basic evidence and empirical moderators of these risk attitudes we then discuss recent extensions to ambiguity time risk and multi attribute utility in the last part we review indirect evidence from applied economic decision tasks

prudence in bargaining the effect of uncertainty on bargaining outcomes abstract we investigate the outcome of bargaining when a player s pay off from agreement is risky we find that a risk averse player typically increases his equilibrium receipts when his pay off is made risky this is because the presence of risk makes individuals behave more patiently in bargaining strong analogies are drawn to the precautionary saving literature we show that the effect of risk on receipts can be sufficiently strong that a decreasingly risk averse player may be better off receiving a risky pay off than a certain pay off

taking time seriously dramatic world change has stimulated interest in research questions about the dynamics of politics we have seen increases in the number of time series data sets and the length of typical time series but three shortcomings are prevalent in published time series analysis first analysts often estimate models without testing restrictions implied by their specification second researchers link the theoretical concept of equilibrium with cointegration and error correction models third analysts often do a poor job of interpreting results the consequences include weak connections between theory and tests biased estimates and incorrect inferences we outline techniques for estimating linear dynamic regressions with stationary data and weakly exogenous regressors we recommend analysts 1 start with general dynamic models and test restrictions before adopting a particular specification and 2 use the wide array of information available from dynamic specifications we illustrate this strategy with data on congressional approval and tax rates across oecd countries

econometric models of asymmetric price transmission abstract in this paper we review the existing empirical literature on price asymmetries in commodities providing a way to classify and compare different studies that are highly heterogeneous in terms of econometric models type of asymmetries and empirical findings relative to the previous literature this paper is novel in several respects first it presents a detailed and updated survey of the existing empirical contributions on price asymmetries in the transmission mechanism linking input prices to output prices second this paper presents an extension of the traditional distinction between long run and short run asymmetries to new categories of asymmetries such as contemporaneous impact distributed lag effect cumulated impact reaction time equilibrium and momentum equilibrium adjustment path regime effect regime equilibrium adjustment path each empirical study is then critically discussed in the light of this new classification of asymmetries third this paper evaluates the relative merits of the most popular econometric models for price asymmetries namely autoregressive distributed lags partial adjustments error correction models regime switching and vector autoregressive models finally we use the meta regression analysis to investigate whether the results of asymmetry tests are not model invariant and find which additional factors systematically influence the rejection of the null hypothesis of symmetric price adjustment the main results of our survey can be summarized as follows i each econometric model is specialized to capture a subset of asymmetries ii each asymmetry is better investigated by a subset of econometric models iii the general significance of the f test for asymmetric price transmission depends mainly on characteristics of the data dynamic specification of the econometric model and market characteristics overall our empirical findings confirm that asymmetry in all its forms is very likely to occur in a wide range of markets and econometric models

exploring higher order risk effects higher order risk effects play an important role in examining economic behavior under uncertainty a precautionary demand for saving has been linked to the property of prudence and the property of temperance has been used to show how the presence of an unavoidable risk affects one s behavior towards a second risk these two properties also play key roles in aversion to negative skewness and to kurtosis respectively both properties recently have been characterized by preferences over lottery pairs in simple 50 50 gambles the simplicity of this characterization is ideal for experimental investigation this article reports the results of such experiments and concludes that there is behavioral evidence for prudence but not for temperance implications of these results for both expected utility and non expected utility models are examined

the demand for selected nutrients by greek households an empirical analysis with quantile regressions the article uses information from the 1993 1994 household consumption survey and the semiparametric quantile regression approach to analyze the demand for three macronutrients carbohydrates proteins and fats and three micronutrients minerals vitamins and cholesterol in greece according to the empirical results the age of the household head the degree of urbanization the percentage of food expenditure devoted to food away from home and the per capita consumption expenditure affect the intakes of nutrients across all the five quantiles considered the impact however of the household head s gender and the impact of his her educational achievement are located only at the lower and the higher quantiles respectively the expenditure elasticities are substantially lower than unity suggesting inelastic responses of nutrient intakes to per capita consumption expenditure

consumer attitudes and voluntary rate schedules for public utilities attitudes enter as latent explanatory variables in a model of consumers choice among optional rate schedules offered by a public utility a consistent estimator of the choice model is described that utilizes the distribution of the latent attitude variables conditional on manifest indicator variables the model is applied to households choice between time of use and non time differentiated rates for electricity to determine the impact of attitudes about energy conservation copyright 1987 by mit press

the theory and econometrics of health information in cross sectional nutrient demand analysis understanding the role of health information in food and nutrient demand has become an important issue over the last decade endogeneity and measurement error are two empirical problems that are inherent in this type of analysis while some type of instrumental variables estimation would appear the obvious solution this article provides several theoretical and empirical reasons why this is not the case in cross sectional analysis an alternative estimation strategy is pursued an empirical example is given and the implications are discussed copyright 2001 oxford university press

information endogeneity and consumer health behaviour application to dietary intakes due to heightened public health interest a growing number of consumer health behaviour studies are focusing on the effect of health information on the demand for health inputs and outcomes many of these studies however have overlooked the potential endogeneity of information variables stemming from unobserved individual heterogeneity due to simultaneity bias ignoring endogeneity may lead to inaccurate estimates of informational effects on health behaviour using dietary intake data for fat saturated fat cholesterol and fibre this paper illustrates the pitfalls of treating health information related to these nutrients as exogenous variables in their demand equations in most of the estimated models the exogeneity of information is statistically rejected when the information variables are treated as exogenous variables their effects on dietary intakes are underestimated the estimated effects of key intake determinants such as income education ethnicity and race are also different in such a

vertical relationships between manufacturers and retailers inference with limited data in this paper different models of vertical relationships between manufacturers and retailers in the supermarket industry are compared demand estimates are used to compute price cost margins for retailers and manufacturers under different supply models when wholesale prices are not observed the purpose is to identify the set of margins compatible with the margins obtained from estimates of cost and to select the model most consistent with the data among non nested competing models the models considered are 1 a simple linear pricing model 2 a vertically integrated model and 3 a variety of alternative strategic supply scenarios that allow for collusion non linear pricing and strategic behaviour with respect to private label products using data on yogurt sold in several stores in a large urban area of the u s the results imply that wholesale prices are close to marginal cost and that retailers have pricing power in the vertical chain this is consistent with non linear pricing by the manufacturers or high bargaining power of the retailers

grain price and volatility transmission from international to domestic markets in developing countries summary understanding the sources of domestic food price volatility in developing countries and the extent to which it is transmitted from international to domestic markets is critical to help design better global regional and domestic policies to cope with excessive food price volatility and to protect the most vulnerable groups this paper examines short term price and volatility transmission from major grain commodities to 41 domestic food products across 27 countries in africa latin america and south asia we follow a multivariate garch approach to model the dynamics of monthly price return volatility in international and domestic markets the period of analysis is 2000 through 2013 in terms of price transmission we only observe significant interactions from international to domestic markets in few cases to calculate volatility spillovers we simulate a shock equivalent to a 1 increase in the conditional volatility of price returns in the international market and evaluate its effect on the conditional volatility of price returns in the domestic market the transmission of volatility is statistically significant in just one quarter of the maize markets tested more than half of rice markets tested and all wheat markets tested volatility transmission seems to be more common when trade imports or exports are large relatively to domestic requirements

commodity prices and food inflation commodity prices rose at unprecedented rates between 2007 and 2008 in the year between july 2007 and july 2008 corn prices rose 51 9 soybean prices 74 4 wheat prices 104 5 and milk prices by 41 4 as farm prices reached their peaks policy makers became concerned over the potential impact on retail food price inflation and when farm prices be gan to fall in late 2008 interest shifted to how fast or whether retail prices followed boyle 2009 leibtag 2008 argues that the surge in commodity prices had little impact on con sumer prices because commodity inputs form a small part of the final product although true for some highly processed foods such as break fast cereals cookies and breads farm prices form a significant part of the retail price for fresh produce meat and dairy products in fact pass through rates from farm to retail prices are likely to vary depending on the nature of the production process gardner 1975 the competitiveness of the vertical supply channel bulow and pfleiderer 1983 kim and cotterill 2008 the number of products sold hamil ton 2009 and even the direction of the price change frey and manera 2007 the pass through rate is a simple and important concept but highly complex to measure previous research on this issue assumes

evaluating price transmission between global agricultural markets and consumer food price indices in the european union this paper uses error correction models to evaluate the extent to and speed at which world agricultural commodity price movements affect consumer food prices in the european union member states we consider three types of world commodity price indices each containing different commodities and weighting criteria results reveal a long run relationship between world agricultural commodity and consumer food prices in over half of the member states consumer prices in different member states and categories of member states respond differently to specific world price indices suggesting that there are disparities in the structure and the efficiency of their food markets the eurozone founders generally have lower transmission elasticities this should be taken into account when predicting the impacts of extreme world price volatility and consumer food price rises prompting governments to pay attention to the most vulnerable households

higher order risk attitudes demographics and financial decisions we conduct an experiment to study the prevalence of the higher order risk attitudes of prudence and temperance in a large demographically representative sample as well as in a sample of undergraduate students participants make pairwise choices between lotteries of the form proposed by eeckhoudt and schlesinger 2006 the choices in these lotteries isolate prudent from imprudent and temperate from intemperate behavior we relate individuals risk aversion prudence and temperance levels to demographics and financial decisions we observe that the majority of individuals decisions are consistent with risk aversion prudence and temperance in both the student and the demographically representative sample an individual s level of prudence is predictive of his wealth saving and borrowing behavior outside of the experiment while temperance predicts the riskiness of portfolio choices our findings suggest that the coefficient of relative prudence for a representative individual is approximately equal to two

schooling health knowledge and obesity the connection between schooling and health is well documented an important empirical issue that needs to be examined however is whether schooling s effects are due to individual health knowledge differences this empirical study examines this issue with an increasingly important health indicator obesity since provision of health knowledge is a major tool of public agencies promoting health this empirical study uses a new direct measure of health knowledge to test this hypothesis the results show that knowledge is inversely related to the probability that an individual is obese schooling s effects on relative weight and the probability of being obese are explained by differences in knowledge this result may imply that schooling s effect on the allocative efficiency of the household production of health is the main reason schooling is linked to health behaviour the result also may imply that the most effective method of health education is to highlight the disease element of poor dietary habits a

fairness risk preferences and independence impossibility theorems the most widely used economic models of social preferences are specified only for certain outcomes there are two obvious methods of extending them to lotteries if we do so by expected utility theory so that the independence axiom is satisfied our results imply that the resulting preferences do not exhibit ex ante fairness if we do so by replacing certain outcomes with their expected utilities for each individual so that individual risk preferences are preserved then ex ante fairness may be preserved but neither the independence axiom nor ex post fairness is satisfied both ex ante and ex post fairness can be satisfied but then the individual does not have well defined preferences over own lotteries

economics food choices and nutrition abstract our goal in this paper is to examine the role and influence of economic factors defined rather broadly on consumer food choices and hence nutritional outcomes we attempt to do this in a non technical fashion we examine the role of prices especially as they relate to the affordability of food in the united states and as a policy lever income is analyzed as a driving force behind changes in eating habits in particular increasing the demand for convenience the role of time constraints as well as time preference are examined as links to healthy eating habits and as forces behind current trends in eating patterns information and knowledge are given prominent play as counter balances to economic forces driving eating habits we conclude with and examination into maternal nutrition knowledge and children s dietary quality

patterns of pass through of commodity price shocks to retail prices commodity prices have been rising at unprecedented rates over the last two years the primary objective of this paper is to assess if and how firms pass through upstream cost increases to final good prices first we investigate what happens to the shelf prices the regular prices of goods that contain significant amounts of a commodity whose price has changed the objective is to document patterns of price rigidity depending on the share of the commodity in the final good that is sold to consumers for example given an abnormal commodity price change in wheat what happens to the shelf regular price of bread wheat cereals and other goods that contain wheat commodity pass through patterns for ready to eat cereal smallest share of commodity in final product and fresh chicken largest share of commodity in final good are investigated second we also assess what happens to the net prices consumers pay that is the regular price net of discounts offered one possible way to pass through a cost increase is to reduce the frequency of promotional discounts or offer smaller discounts to consumers upstream commodity input prices used in our investigation are wheat and corn futures prices to account for upstream inputs and flour and chicken feed producer price sub indices for downstream cost shocks we combine several datasets for this empirical analysis commodity prices commodity price indices and scanner data on prices for a variety of goods over a four year time period and across several stores in california belonging to a large retail chain we construct quantity weighted price indices within two product categories sold in the supermarket where prices are weighted by pre determined quantity weights to obtain shelf price indices and net price indices for each of the commodities regressions will be run using store level product upc weekly data the reduced form regressions consist of projecting the shelf price index as well as the net price index on commodity prices other explanatory variables and on region and time dummies the point estimates measure the effect of residual changes in commodity prices net of seasonal and regional effects on the prices consumers face when making purchase decisions we also construct a variable that measures the frequency of price discounts and relate that variable to the same explanatory variables we estimate pass through behavior using the above three different measures of retail price activity controlling for cost proxies store level fixed effects and regional time trends using panel data estimation techniques results suggest that an important part of retail price variation comes from promotional activities and the usual shelf price index would underestimate the true pass through coefficient to deal with omitted variables and price stickiness we included a lagged dependent variable using the arellano bond dynamic panel estimator for chicken the results show that using standard information on regular shelf price leads to an underestimation of the true pass through coefficient for cereal using standard shelf prices leads to an overestimation of the pass through coefficient reflecting the importance of storability faced by consumers and retailers and industry characteristics in the sale dynamics not only do our cost pass through estimates account for sales we also provide dynamic multipliers for grain commodity price increases to supermarket shelf prices the estimated dynamic elasticities are not as small as one might expect from a naive model the elasticity of cereal price with respect to flour is over 1 and the elasticity of chicken price with respect to chicken feed was 30 percent these estimates would imply a very large price increase in cereal and chicken over the last several years there are fewer sales when commodity prices go up from this we would conclude that net prices should be used for pass through analysis

do oil price increases cause higher food prices us retail food price increases in recent years may seem large in nominal terms but after adjusting for inflation have been quite modest even after the change in us biofuel policies in 2006 in contrast increases in the real prices of corn soybeans wheat and rice received by us farmers have been more substantial and can be linked in part to increases in the real price of oil that link however appears largely driven by common macroeconomic determinants of the prices of oil and of agricultural commodities rather than the pass through from higher oil prices we show that there is no evidence that corn ethanol mandates have created a tight link between oil and agricultural markets moreover increases in agricultural commodity prices have contributed little to us retail food price increases because of the small cost share of agricultural products in food prices in short there is no evidence that oil price shocks have been associated with more than a negligible increase in us retail food prices in recent years nor is there evidence for the prevailing wisdom that oil price driven increases in the cost of food processing packaging transportation and distribution have been responsible for higher retail food prices similar results hold for other industrialized countries there is reason however to expect food commodity prices to be more tightly linked to retail food prices in developing countries christiane baumeister and lutz kilian

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

search with learning from prices does increased inflationary uncertainty lead to higher markups aggregate cost uncertainty arising from real shocks or unanticipated inflation reduces the informativeness of prices by scrambling relative and aggregate variations but when agents can acquire additional information such increased noise may in fact lead them to become better informed and price competition will intensify we examine these issues in a model of search with learning where consumers search optimally from an unknown price distribution while firms price optimally given consumers search rules we show that the decisive factor in whether inflation variability increases or reduces the incentive to search and thereby market efficiency is the size of informational costs

determinants of food price inflation in finland the role of energy abstract the agricultural commodity crisis of 2006 2008 and the recent evolution of commodity markets have reignited anxieties in finland over fast rising food prices and food security little is known about the strength of the linkages between food markets and input markets such as the energy market using monthly series of price indices from 1995 to 2010 we estimate a vector error correction vec model in a cointegration framework in order to investigate the short term and long term dynamics of food price formation the results indicate that a statistically significant long run equilibrium relationship exists between the prices of food and those of the main variable inputs consumed by the food chain namely agricultural commodities labour and energy when judged by the magnitude of long run pass through rates farm prices represent the main determinant of food prices followed by wages in food retail and the price of energy the parsimonious vec model suggests that the dynamics of food price formation are dominated by a relatively quick process of adjustment to the long run equilibrium the half life of the transitional dynamics being six to eight months following a shock