likely effects on obesity from proposed changes to the us food stamp program abstract some have suggested that the us food stamp program fsp should be revised with a view to combating obesity among the poor in this paper we assess the likely impacts of allowing fsp participants to purchase only healthy foods when using food stamps our results indicate that fsp participants would probably increase their consumption of healthy food but the implications for their purchases of unhealthy food are not clear market wide consequences are even less clear because changing what may be purchased using food stamps would lead to higher prices for healthy foods and lower prices for unhealthy foods and these price effects would feed back into consumer decisions with adverse effects on consumption patterns of both participants and non participants in the fsp in addition more restrictive rules on the use of food stamps would discourage participation in the fsp we conclude that while reforming the fsp may indeed to lead to better diets among participants it is likely to be an ineffective and inefficient instrument for bringing about desired nutritional outcomes unless accompanied by additional policy instruments

estimating the economic impact of political party competition in the 1992 british election quences of government partisanship major problem facing researchers who study the consequences of government partisanship is that it is difficult to ascertain the potential economic impact of governments which because of election defeats never existed consider for instance a labour government in britain in 1992 a conservative government in 1997 or a dole administration in the united states none of these governments actually took office and for obvious reasons this impedes analysis of what effects they would have had on their respective national economies here i present a methodology designed to estimate the economic impact that an election losing party would have caused had it achieved office i focus in particular on the 1992 british polity and demonstrate that campaign period prices of london based publicly traded securities can be used to estimate what was expected to have happened in the british economy conditional on a 1992 labour victory the estimates show that a labour government in 1992 was expected by british investors to have ushered in significantly higher interest rates and depressed stock markets compared to those witnessed under the victorious conservative party these results imply that the labour conservative disparity in 1992 was substantial and that relative to the conservative party labour was truly left wing prices of market traded securities ostensibly nonpolitical variables can convey a great deal about political parties electoral competition and the consequences of government partisanship suppose for example that prices in london stock markets were unusually volatile during the 1992 british election campaign and that they jumped dramatically following polling day and the conservative victory according to the analytical ap

size and productivity in the u s milling and baking industries from the late 1950s through mid 1990s productivity growth in u s grain milling and feed manufacturing has been consistently strong and positive in grain milling approximately 15 of the growth is due to size economies technical change has been capital using increasingly material saving and in recent years decreasingly labor saving or increasingly labor using the quality of capital has risen relative to that of labor and materials in all but the baking industry capital intensification and incentives for plant size growth remain unabated copyright 2000 oxford university press

democratic processes political risk and foreign exchange markets 3i6 foreign exchange markets are among the deepest and widest financial markets in the world technological innovations and market liberal ization have made currency markets enormous by 1992 the vol ume of transactions topped over 1 trillion each day moreover economic agents can trade currencies with shocking speed during the september 1992 e m s crisis british monetary authorities expended over two billion dollars to support the pegged value of the pound in only a few hours the behavior of these currency markets can affect not only trade flows and in ternational investment key determinants of economic performance but also political outcomes consequently exchange rates have become a highly salient issue both at the domestic and international levels indeed some political economists assert that rapidly adjusting international markets may overwhelm the ability of policymakers to control policy and according to the most extreme view thwart any meaningful democracy understanding how currency markets behave therefore is fundamental step to assess accu rately how the internationalization of economic activity influences demo cratic politics we investigate how democratic political events affect currency markets by focusing on the relationship between the spot and forward exchange rate markets the efficient markets hypothesis implies that the forward ex change rate the price of the currency deliverable thirty days in the fu ture should be an unbiased predictor of the future spot exchange rate that is today s thirty day forward rate should on average accurately pre dict the spot exchange rate one month from today empirical studies how ever conclude that the forward rate is often a biased predictor of future ex change rate changes many economic models attribute this bias to a risk premium where currency traders demand a higher return for holding the currency

a further look at flexibilities and elasticities relationships between price elasticities and price flexibilities are examined with emphasis on comparing sizes of difference between a directly estimated demand matrix and an inverted demand matrix results show that by using inverted elasticities to represent flexibilities or vice versa sizable measurement errors may be committed in agricultural policy and program analysis a directly estimated demand matrix should be used

impacts of declining u s retail beef demand on farm level beef prices and production a systems model was estimated to determine the effects of declining u s retail beef demand on farm level beef prices and production retail beef demand declined by nearly 66 from 1976 to 1999 results indicate autonomous shifts in retail demand significantly impacted farm level demands and production based on equilibrium multipliers the 1976 99 reduction in beef demand decreased real slaughter cattle prices and production by 32 1 and 11 2 respectively real feeder cattle prices and production decreased by 8 0 and 22 6 respectively combining the decreases in farm prices and production slaughter and feeder cattle producers experienced a real revenue reduction of 13 3 billion 61 due to the long term decline in demand

the leading shareholder strategy takeover contests and stock price dynamics abstract this paper analyzes the attractiveness of the leading shareholder strategy control without majority ownership for a potential takeover bidder with a cost of raising funds additional purchases commit the bidder to more aggressive behavior in a takeover battle and thus discourage competing bids at the optimum the bidder thus trades off the cost of buying additional shares with the risk of losing control to another bidder small shareholders payoffs depend instead on the relative management skills of the bidders and on the premium they obtain when competing bidders enter the battle this model can also be interpreted in terms of equilibrium ownership of dominant shareholders facing costs of raising funds and risks of takeover attempts

a comparison of event study methodologies using daily stock returns a simulation approach accounting research studies commonly use measures of abnormal security returns to test hypotheses about accounting information and policies alternative methods are used in these studies to detect abnormal performance and thereby examine the information content of identified events the ability of these methods to detect abnormal returns using simulation techniques is examined by brown and warner 1980 1984 morse 1984 addresses this issue analytically the analytical approach presumes that the event study data is generated by the process modeled while the simulation approach uses the security return data generated by the market simulation provides a tractable means of dealing with situations where an analytical approach may yield results suggesting direction but not magnitude or where such techniques are unusually cumbersome both limitations face us in this study brown and warner 1980 use monthly data to examine the comparative abilities of several combinations of return generating models and

safety and quality regulation and stage of distribution let 0 denote the level of quality inherent in a food product that is delivered to some terminal market in this paper i characterize allocations over 0 and provide an economic rationale for regulating safety and quality standards in the food system zusman and bockstael investigate the theoretical foundations for imposing standards and stress the importance of providing a tractable conceptual foundation despite a wealth of contributions that are mainly empirical for reviews of these works see respectively caswell and antle there have been relatively few attempts to model formally the linkages between farm and food markets when food quality and consumer safety are at issue here i attempt to provide such a framework building on key contributions in the theoretical literature and linking them in a simple model of quality determination in a vertically related marketing channel the food marketing model is due to gardner spence provides a foundation for pareto improving intervention in a deterministic model of quality provision and leland building on the classic paper by akerlof investigates licensing and minimum standards when the information structure is incomplete linking these ideas in a satisfactory model of the food markets is the main objective of the paper

market delineation and demand structure this paper addresses the relationship between the cointegration approach to market delineation and the more traditional approach of analyzing the demand structure among different products in terms of degree of substitutability cointegration tests for market delineation and estimation of a dynamic system of demand equations are undertaken utilizing the same data set the data set consists of three high quality seafood products in the european union the results are encouraging as the results from the two approaches are not only compatible but are also complementary in the sense that they provide more information together than they do separately

industrialization and consolidation in the u s food sector implications for competition and welfare good sources for information on recent developments in food market structure include barkema drabenstott and welch u s department of agriculture 1996b and rogers my objective is not to add to this literature but rather to consider what we have learned as a profession about the rapid consolidation in food processing and distribution what are its implications for market power economic efficiency and the distribution of economic welfare among producers consumers and marketers

the politics of speculative attacks in industrial democracies recent models of speculative currency crises contend that market expectations of policy behavior can trigger a speculative attack we argue that political processes and partisan objectives inform expectations about the government s commitment to the exchange rate first market actors anticipate periods when the partisan identity of a government may change through an election or a cabinet collapse second party labels provide information to currency traders about the policy objectives of a potential government consequently we contend that the probability of a speculative attack will be higher when markets expect the cabinet to end and when the cabinet dissolution is likely to produce a leftward shift in policy a discrete timesurvival model is used to estimate the probability that a cabinet will dissolve in any given month for sixteen parliamentary democracies from 1970 to 1995 the predicted values are then used as a proxy for market expectations in a model of speculative currency crises

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

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

the effects of farm commodity and retail food policies on obesity and economic welfare in the united states many commentators claim that farm subsidies have contributed significantly to the obesity epidemic by making fattening foods relatively cheap and abundant and symmetrically that taxing unhealthy commodities or subsidizing healthy commodities would contribute to reducing obesity rates in this article we use an equilibrium displacement model to estimate and compare the economic welfare effects from a range of hypothetical farm commodity and retail food policies as alternative mechanisms for encouraging consumption of healthy food or discouraging consumption of unhealthy food or both we find that compared with retail taxes on fat sugar or all food or subsidies on fruits and vegetables at the farm or retail levels a tax on calories would be the most efficient obesity policy a tax on calories would have the lowest deadweight loss per pound of fat reduction in average adult weight and would yield a net social gain once the impact on public health care expenditures is considered

initial shareholdings and overbidding in takeover contests within the context of takeovers this paper shows that in private value auctions the optimal individually rational strategy for a bidder with partial ownership of the item is to overbid i e to bid more than his valuation this strategy however can lead to i an inefficient outcome and ii the winning bidder making a net loss further the overbidding result implies that the presence of a large shareholder increases the bid premium in single bidder takeovers at the expense of reducing the probability of the takeover actually occurring

agribusiness economics and management agribusiness scholarship emphasizes an integrated view of the food system that extends from research and input supply through production processing and distribution to retail outlets and the consumer this article traces development of agribusiness scholarship over the past century by describing nine

optimal toeholds in takeover contests abstract we offer an explanation for why raiders do not acquire the maximum possible toehold prior to announcing a takeover bid by endogenously modeling the target firm s value following an unsuccessful takeover we demonstrate that a raider may optimally acquire a small toehold even if the acquisition does not drive up the pre tender target price this occurs because although a larger toehold increases profits if the takeover succeeds it also conveys a higher level of managerial entrenchment and hence a lower firm value if the takeover fails we derive new predictions regarding the optimal toehold and target value following a failed takeover we also examine the impact of a rival bidder and dilution

merger negotiations and the toehold puzzle abstract the substantial control premium typically observed in corporate takeovers makes a compelling case for acquiring target shares a toehold in the market prior to launching a bid moreover auction theory suggests that toehold bidding may yield a competitive advantage over rival bidders nevertheless with a sample exceeding 10 000 initial control bids for us public targets we show that toehold bidding has declined steadily since the early 1980s and is now surprisingly rare at the same time the average toehold is large when it occurs 20 and toeholds are the norm in hostile bids to explain these puzzling observations we develop and test a two stage takeover model where attempted merger negotiations are followed by open auction with optimal bidding a toehold imposes a cost on target management causing some targets to rationally reject merger negotiations optimal toeholds are therefore either zero to avoid rejection costs or greater than a threshold so that toehold benefits offset rejection costs the toehold threshold estimate averages 9 across initial bidders reflecting in part the bidder s opportunity loss of a merger termination agreement in the presence of market liquidity costs a threshold of this size may well induce a broad range of bidders to select zero toehold as predicted the probability of toehold bidding decreases and the toehold size increases with the threshold estimate the model also predicts a relatively high frequency of toehold bidding in hostile bids as observed overall our test results are consistent with rational bidder behavior with respect to the toehold decision

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

cross subsidization due to inframarginal support in agriculture a general theory and empirical evidence a general theory of cross subsidization due to inframarginal support is developed two sources of output distortion are identified exit deterrence and extramarginal output some firms would not be in business without the subsidy cost savings due to declining average costs are always greater than the losses incurred where price equals marginal cost moreover it is theoretically possible for inframarginal subsidies to expand output more than equivalent fully coupled subsidies empirical analysis of u s dairy subsidies isolates these components of cross subsidization and finds distortions from inframarginal support to be substantial with implications for trade negotiations dispute settlement and policy formulation copyright 2008 oxford university press

supply demand and technology in a multiproduct industry texas field crops the purpose of this paper is to examine the structure of agricultural production for six texas field crops cotton grain sorghum wheat corn rice and hay which account for nearly 95 of recent field crop value specific objectives are to a test the structure of technology to determine i if output and input utilization choices for individual products are independent of production decisions about other outputs and ii if products and or inputs can be consistently aggregated b estimate a coherent set of interrelated supply functions for the six commodities and input demand functions for fertilizer and hired labor because the empirical focus of this paper is specific to one state the results will be of limited value for interpreting specific production relationships elsewhere however the problem is of common interest in production agriculture and the techniques used demonstrate an important application of dual modeling

distribution of gains from research and promotion in multi stage production systems the case of the u s beef and pork industries a producer financed program that leads to either an increase in retail demand from promotion or a decrease in marketing costs from research will generate returns to producers that are generally smaller than returns generated through an equivalent change in producer supply from research the distribution of gains depends on the degree of substitutibility between farm and nonfarm inputs comparative statics of equal absolute changes in demand supply and marketing costs in the u s beef and pork industries show the significance of input substitutibility for distribution of gains and sensitivity of the results to beef and pork demand interrelationships

wic and the price of infant formula this article presents an economic model of a national infant formula market that quantifies the effects of sole source contracts on infant formula prices on producer earnings and on the taxpayer cost of providing infant formula to participants of the special supplemental nutrition program for women infants and children it shows that the behavior of paying customers manufacturers and retail stores determines the value of local sole source contracts to manufacturers and that this value motivates manufacturers to acquire sole source contracts and make rebate payments that contain the taxpayer cost of providing infant formula to program participants

market responses to politics the rise of lula and the decline of the brazilian stock market this article argues that stock market responses to political events provide information on how politics affect markets political events such as the election of a politician that is expected to enact market friendly policies lead to increases in stock market returns conversely political events that are expected to have a negative impact on the economy and specific firms lead to decreases in stock market returns the 2002 brazilian presidential election provides a critical case study for evaluating this hypothesis the authors use movements in the brazilian stock market as proxies for future expectations for the brazilian economy using a number of time series regressions they estimate the impact of the four main brazilian presidential candidates on the mean and variance of the brazilian stock market these findings provide important insights into the expected impact of the main presidential candidates on the brazilian economy and more generally the relationship between elections and economic perfo

competing bids target management resistance and the structure of takeover bids we examine the structure of initial takeover bids and the frequency of observing competing bids and target management resistance we find the use of cash is not consistently correlated with the frequency of competition or resistance and that the cost of acquiring information about a target is associated with the likelihood of competition and resistance a high bid premium appears to deter competing offers and is also associated with a lower likelihood of resistance finally target management resistance is associated with an increased likelihood of a competing offer arising and a larger increase in target shareholder wealth between the initial public announcement and outcome dates relative to the not resisted subsample for both successful and unsuccessful acquisition proposals article published by oxford university press on behalf of the society for financial studies in its journal the review of financial studies

structural change in factor demand relationships in the u s food and kindred products industry this analysis utilizes multivariate gradual switching regression techniques and bayesian inferential procedures to evaluate structural change in factor demand relationships in the food manufacturing industry food materials are included as an input into the food manufacturing industry the results confirm a significant gradual structural change that initiated in 1980 price elasticities indicate that the demands for raw food materials and energy have become more elastic while the demand for labor has become less elastic morishima elasticities of substitution indicate that nearly all factors are substitutes and that the degree of substitutability has significantly increased in recent years

efficient and inefficient sales of corporate control this paper develops a framework for analyzing transactions that transfer a company s controlling block from an existing controller to a new controller this framework is used to compare the market rule which is followed in the united states with the equal opportunity rule which is used in many other countries the market rule is superior to the equal opportunity rule in facilitating efficient transfers of control but inferior to it in discouraging inefficient transfers conditions under which one of the two rules is overall superior are identified for example the market rule is superior if existing and new controllers draw their characteristics from the same distributions finally the rules effects on surplus division are analyzed and this examination reveals a rationale for mandatory rules

takeovers and divergence of investor opinion we test several hypotheses on how takeover premium is related to investors divergence of opinion on a target s equity value we show that the total takeover premium the pre announcement target stock price run up and the post announcement stock price markup are all higher when investors have higher divergence of opinion we obtain identical results with higher market level investor sentiment when divergence of opinion is higher a firm is less likely to be a takeover target although takeover synergy in successful takeovers is higher our results suggest that takeovers may play a role in explaining high contemporaneous stock prices in the presence of high divergence of investor opinion the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

production incentives from static decoupling land use exclusion restrictions many agricultural support payments are based on past production with restrictions on how land may currently be used when support payments to field crops are analyzed in a static framework they do not directly impact current production decisions however over time as relative profits change these payments affect current output the payments may keep land in less profitable production of program crops through restrictions prohibiting potentially more profitable endeavors such as cultivating fruits and vegetables these payments have the potential to lead to production and trade distortions similar in magnitude to the distortions associated with direct production subsidies

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

the poultry market demand stability and industry structure the stability of the demand for poultry meat and specification issues in its estimation are explored the analysis concludes that the demand for poultry meat shifted out in the early 1970s at the same time the demand relationship between poultry and pork changed from substitution to independence a second conclusion is that poultry price is predetermined for demand in annual u s data while quantity is not a predetermined price suggests several market structures exogeneity tests are performed to distinguish among them the results are consistent with a competitive constant returns to scale industry facing elastic factor supplies

the structure of food demand interrelatedness and duality this paper presents a new empirical demand system which mitigates the effects of multicollinearity while facilitating the measurement of interrelatedness duality theory is used to derive the inverse demand functions using data on fourteen food items a complete set of demand equations is estimated in both quantity and price dependent forms the model is used to test for the theoretical restrictions of homogeneity additivity and negativity as well as the habit formation hypothesis a comparison is made between these results and those of brandow and george and king

pre tender offer share acquisition strategy in takeovers this paper models the strategic pre tender offer share acquisition problem faced by po tential bidders in takeovers the model provides a rational explanation for the seemingly anomalous empirical evidence that the information about the impending tender offers is not fully conveyed through the potential bidders pre tender offer trades and for the evidence that a large fraction of bidders do not hold any target shares prior to launching the tender offers additional testable implications are also provided

multiple input multiple output production choices and technology in the u s wheat region duality theory motivates a translog expected profit function consistent with multiple products price uncertainty preseason climate constraints acreage control policies and possibly nonhomothetic technology although multiple outputs are allowed enterprise specific data is not necessary instead time series measures of output revenues and expected prices input expenses and prices and fixed input flows are employed appropriate measures of elasticities of choice returns to size and biases in technological change are derived results indicated decreasing returns to size rather limited though complementary responsiveness of choices to price changes and the nature of biases in technological changes

do tender offers create value new methods and evidence abstract conventional techniques of estimating takeover value improvements measure only a fraction of the total gain and include revelation about bidder stand alone value to address these biases we develop the probability scaling method which rescales announcement date returns and the intervention method which uses returns at intervening events perceived value improvements are larger than traditional methods indicate we cannot reject the hypothesis that bidders on average pay fair prices combined bidder target stock returns are higher for hostile offers lower for equity offers and lower for diversifying offers these effects reflect revelation about bidder stand alone value not differences in gains from combination

food stamps and the market demand for food this article compares estimates of disaggregated market food demand responses to the supplemental nutrition assistance program benefits based on exact nonlinear aggregation to responses based on linear aggregation by accounting for income inequality nonlinear aggregation implies that only the households that receive benefits contribute to market demand responses in contrast linear aggregation presumes all households receive benefits and thus contribute to the market demand response the consequence is that nonlinear market estimates are smaller than the linear estimates by roughly the fraction of households that receive benefits

political parties and monetary commitments we argue that political parties will choose monetary institutions in order to help them win elections and retain office increased levels of economic openness in the industrial democracies have complicated the pursuit of office by altering the policy preferences of constituents and decreasing the ability of cabinet ministers to deliver promised economic outcomes we contend that monetary commitments can help political parties manage diverse constituent interests restore policy effectiveness and ultimately maintain their position in office therefore we expect that fixed exchange rates and central bank independence can improve cabinet durability especially under conditions of economic openness in the first section we discuss how fixed exchange rates and central bank independence can insulate cabinets from the political shocks of increased economic openness to determine the political value of these commitments we then test the effect of exchange rate commitments and central bank independence on cabinet durability in the second section in the third section we use the results of our statistical models to generate expected cabinet durability for the countries in our sample under alternative institutional configurations by comparing the expected durabilities we show that most monetary reforms have helped or at least not hurt expected cabinet durability

technology labor wars and producer dynamics explaining consolidation in beefpacking beefpacking underwent a dramatic transformation in the 1970s and 1980s as plants got much larger and industry concentration rose dramatically we use individual census bureau plant records to analyze the sources of the transformation we find that there were modest but extensive scale economies in packing plants covering the full range of plant sizes and that such economies became more important throughout the period of the study as production shifted to larger plants we estimate that the industry s aggregate processing costs fell by 35 3 by 2002 compared to what they would have been without consolidation

the optimal export tax for a primary commodity in a vertical market the conventional formula for the optimal export tax derived from a partial equilibrium model that ignores importers welfare is extended to include the deadweight loss to the domestic economy associated with the tax applying the extended formula to the tax russia imposes on its exports of logs results suggest ignoring the marketing channel causes the optimal export tax for a primary commodity to be understated the degree of understatement increases as the supply of logs and processing marketing inputs become less price elastic and as buyer and seller power in the downstream lumber industry increases for plausible values of model parameters however the degree of understatement is modest less than 19

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

using information diffusion models to estimate the impacts of regulatory events on publicly traded firms abstract analysis and evaluation of regulatory actions require inexpensive and timely information about resultant costs and benefits this paper extends the traditional event study methodology for assessing the impact of regulatory actions on the value of publicly traded firms we use diffusion theory to construct several models of how markets adjust to regulatory events ex ante preference for a particular model is based on prior knowledge about the characteristics of the regulatory event and information diffusion patterns we demonstrate the use of the methodology by applying it to an analysis of the impacts of a regulatory action taken to protect the northern spotted owl

price transmission and market integration vertical and horizontal price linkages for salmon relationships between prices are of interest when testing for market integration as well as analyses of supply chains a feature that has received little attention is that if two supply chains are linked by market integration at some stage then the whole supply chain will be linked furthermore the leading price in such a system can be in one supply chain and will not be revealed in market integration studies or analysis of a single supply chain an empirical analysis is provided for the supply chains for salmon which originates in norway and the united kingdom and is then sold at retail level in france as smoked salmon we find a high degree of price transmission in both supply chains as well as integrated markets

disentangling the consequences of direct payment schemes in agriculture on fixed costs exit decisions and output this paper goes beyond orthodox considerations of direct payment effects on agricultural output by highlighting the role of subsidies in affecting individual producers ability to cover fixed costs and in distorting the volume of aggregate production and net trade by implicitly discouraging exits the theoretical model considers both taxpayer and consumer financed decoupled direct payment schemes and compares them to a coupled production subsidy in terms of possible producer responses to direct payments the paper proposes an analytical framework of production decision making in the presence of a stochastic distribution of fixed costs across representative farms the paper shows that decoupled payments in theory can have a larger effect on output than coupled payments the model explicitly recognizes three consequences of domestic support a induce exit or entry b bias production incentives to domestic markets and c cross subsidize export in global markets an empirical model of the u s wheat sector is developed to illustrate the relative potential impacts of coupled versus decoupled payments on output through the effects on a farmer s ability to cover fixed costs and hence exit decisions

corporate takeovers the efficiency arguments in recent years the tender offer takeover has been praised and damned with a ferocity suggesting that the survival of capitalism is at stake the truth as in most disputes with substantial metaphysical content is more prosaic some takeovers enhance economic efficiency some degrade it and the balance of effects though not fully known is most likely a close one in this essay i try to lay bare the debate s foundations and bring it back to earth with an injection of evidence

on market equilibrium analysis in this paper we develop the implications of competitive market equilibrium for production and household behavior when some prices are endogenously determined the properties of market equilibrium functions are explored including the effects of pricing policy a slutsky type equation relating compensated and uncompensated market equilibrium functions is derived implications for multimarket welfare analysis are presented focusing on the effects of pricing policy and technical change

characteristics and hedonic pricing of differentiated beef demands we estimate a cbs system model of u s derived demand for meat we use this model 1 to examine relationships between three quality categories of beef and three other meats and 2 to simulate how taste shifts have affected demands for meats over time we extend previous studies by disaggregating wholesale beef production into three quality categories 1 usda choice grade or higher 2 usda select or lower and 3 cow and bull beef innovative features of our empirical model include a breakout of table cuts into choice and select and the use of a hedonic characterization of the two breakouts to value choice ness and beef ness our model demonstrates important shifts in separate demands for choice and select beef we show that separately the demand for choice grade beef declined in the 1980s and 1990s and the demand for select beef increased a departure from the relatively stable demand characterizations of more aggregated measures of combined choice and select beef jel classification q11 q13

correcting for measurement error in food demand estimation use of disappearance data as proxies for actual consumption causes inconsistent estimates of own price retail demand elasticities a system of equations describing consumer processor and producer behavior is used to consistently estimate the retail demand elasticity for beef using available data while avoiding the restrictive assumption of fixed input proportions implicit in disappearance data this approach yields an estimate of the own price retail demand elasticity for beef of 0 45 which is more inelastic than the estimate 0 66 obtained using a traditional approach the methodology is applicable to other food commodities for which disappearance data serve as proxies for actual consumption copyright 1993 by mit press

hedonic estimation of quality factors affecting the farm retail margin a model of the farm retail marketing margin is tested using producer and retail prices of a perishable product in which time during season and quality characteristics are variable empirical analysis verifies that the marketing margin of california fresh peaches decreases during the season and increases with improved quality results identify potential producer gains from improving product quality early in the season and from price signals compensating producers for quality characteristics other than weight

toehold strategies takeover laws and rival bidders abstract prior to the announcement of a tender offer the bidding firm is legally allowed to acquire shares in the open market subject to some limitations these pre announcement purchases are known as toeholds this paper presents a simple model that describes the bidder s optimal toehold acquisition strategy within an environment that closely parallels the present legal institutions the model shows that toeholds and bids interact in a complex manner even without the presence of asymmetric information by examining a simple environment the paper provides a useful alternative hypothesis for tests of other presumably more complex models one of the main implications of our model is that if no competing bidders are expected no toeholds should be purchased the paper also demonstrates that the correct specification of an empirical model can be critical for example under some parameter values toehold purchases may exhibit a negative cross sectional correlation with the pre announcement run up in the stock price this occurs even though prices are strictly increasing the size of the toehold several implications concerning various aspects of merger legislation are considered for example we demonstrate that a rule similar to a fair price provision has the desirable property that a second bidder arrives and wins if and only if he places a higher value on the target than the initial bidder

demand for farm output in a complete system of demand functions demand interrelationships for farm outputs that are theoretically consistent with consumer demand and marketing group behavior provide important linkages between retail and farm prices a conceptual model based on reduced form specifications for retail and farm prices is formulated and applied empirically to a set of eight disaggregated food commodities this approach circumvents the need for retail quantities which are frequently unavailable for disaggregated food commodities the results are consistent with theory and generally indicate significant substitution between farm and marketing inputs except for poultry derived demand elasticities are at least 40 larger compared to those derived assuming fixed proportions

democracy and markets the case of exchange rates the relationships between the workings of democratic institutions and currency markets are studied severa competing propositions about how political re equilibration affects currency markets are derived and tested the results support the view that democratic politics affects currency markets expectations and uncertainty about electoral outcomes and government survival affect the probability of switching between currency market equilibria additionally opinion polls about chief executive performance have a direct effect on the probabilities of switches between currency regimes suggesting that these polls cause currency traders to revise their expectations about the stability of governments and or the contents of public policies electoral institutions mitigate the impact of politics on currency market equilibria political effects are weaker in countries with proportional representation electoral systems than in countries with majority plurality systems there is less evidence that central bank independence consensual corporatist systems or political coherency reduces the effect of politics on currency markets he study of democracy and markets is at the heart of political economy understanding how political equilibration and economic equilibration are related is one of the main challenges facing this field the size and nature of currency markets make them especially important cases substantively with globalization currency markets have become important constraints on elected governments reducing their room to maneuver analytically in comparison to most goods markets currency markets are informationally efficient asset markets with distinctive equilibria today s exchange rate is determined by currency traders fully informed expectations about tomorrow s exchange rate the sensitivity of these markets to the arrival of new information therefore makes them particularly well suited for studying the effects of political news and uncertainty on economic equilibration 1 this article demonstrates there are informationally relevant political factors insofar as exchange rate determination is concerned factors that directly affect the transition probabilities between currency market equilibria moreover these factors vary in important ways across democracies some electoral institutions lessen the effects of politics on currency

markup pricing in mergers and acquisitions this paper studies the relation between the premiums in takeover bids involving exchange listed target firms from 1975 91 and the pre announcement stock price runups the evidence shows that the pre bid runup and the postannouncement increase in the target s stock price the markup are generally uncorrelated with little substitution between the runup and the markup the runup is an added cost to the bidder this finding has important implications for assessing the costs of insider trading it also raises interesting questions about the role of information from public capital markets in private takeover negotiations

noise trading and takeovers a model of takeovers is investigated in which noise trading provides camouflage that makes it possible for a large corporate outsider to purchase enough shares at favorable prices so that takeovers become profitable although the model accommodates the possibility of dilution grossman and hart 1980 and a large incumbent shareholder shleifer and vishny 1986 neither dilution nor a large incumbent shareholder is necessary for costly takeovers to be profitable noise trading tends to encourage costly takeovers that otherwise would not occur and to discourage beneficial takeovers that otherwise would occur

theory of the firm in short run industry equilibrium a number of economists have studied the long run input behavior eugene silberberg 1974a lowell bassett and thomas borcherding 1 970a b c c e ferguson and thomas saving and paul meyer 1967 of a competitive industry in which entry or exit continues until industry output price moves to the minimum average cost of the marginal firm in the industry however this analysis requires very strong assumptions which severely restrict diversity between firms silberberg 1974a for example assumes all firms production functions are identical except for a scale factor complementary to these long run investigations i will present a compact but thorough analysis of the short run case in which technology and the number of firms are fixed but industry output price responds to aggregate supply changes of existing firms resulting from changes in factor prices in contrast to the long run analysis no assumptions limiting interfirm diversity nor any other restrictions beyond definition of the usual neoclassical firm are needed furthermore results are obtained for industry factor demand which do not necessarily hold for individual firms when they respond to factor prices jointly with other firms in the industry this contradicts the older methodology associated with paul samuelson 1947 in which factor demand responses are derived for firms acting in isolation from each other and their isolated responses are aggregated to obtain the industry factor response for example traditional theory shows input response obeys the law of demand for isolated firms but this standard result no longer holds when a firm adjusts within a larger industry of firms whose collective output response can affect output price thus the law of demand for industry factor behavior cannot be established by aggregation of isolated firm responses however its validity does nevertheless hold in the short run in which the number of firms in the industry is constant therefore the purpose of this paper is to characterize the short run industry level factor demand implications and to show how these implications relate to the traditional theory of isolated firm behavior in addition it is briefly shown how these short run results also imply that the law of demand is likely to hold even in the long run where entry and exit from the industry can occur even for an industry of quite dissimilar firms given the well established literature of the standard neoclassical firm the main body of the paper will confine presentation to required definitions and the statement plus interpretation of the main results all proofs and derivations are reserved for the appendix