competition cooperation and innovation organizational arrangements for regimes of rapid technological progress abstract discussions of the link between firm size and innovation are outmoded because the boundaries of the firm have become fuzzy in recent decades strategic alliances constellations of bilateral agreements among firms are increasingly necessary to support innovative activities such alliances can facilitate complex coordination beyond what the price system can accomplish while avoiding the dysfunctional properties sometimes associated with hierarchy antitrust law and competition policy need to recognize that these new organizational forms are often the functional antithesis of cartels though they may have certain structural similarities a more complete understanding of bilateral contracts and agreements ought to reveal when and how cooperation can support rather than impede innovation and competition

distinguishing between whole farm vs partial farm participation in the conservation reserve program by distinguishing between the decision to participate in the conservation reserve program crp and the decision for whole farm vs part farm participation we model participation as separate binary decisions our results suggest the farm characteristics and other factors affect the decision to participate in crp differently than the decision regarding whole farm vs part farm participation this model formulation also helps to clarify the conditions under which the effect of crp payments on the acreage enrolled in the program is positive or negative

evolution of the economics of agricultural policy agricultural economists helped develop farm programs to respond to the dire economic situation of the 1920s and 1930s some early authors appreciated that such policies created problems in markets for commodities and inputs over time our understanding of agricultural issues and policies has deepened through the application of improved models and tools of analysis to more extensive data we have developed better answers to old questions and have responded to changing policy instruments market contexts and policy concerns this article traces the evolution of our deepening economic understanding of the causes and consequences of agricultural policy

input use decisions with greater information on crop conditions implications for insurance moral hazard and the environment emerging precision agriculture technologies allow farms to make input decisions with greater information on crop conditions this greater information occurs by providing improved predictions of crop yields using remote sensing and crop simulation models and by allowing farms to apply inputs within the growing season when some crop conditions are already realized we use a stylized model with uncertainty in yield and price to examine how greater information on crop conditions i e a forecast affects input use for insured and uninsured farms we show that moral hazard decreases farms apply more inputs as the forecast accuracy improves when the forecast indicates good yields and vice versa when the forecast indicates bad yields in the long run moral hazard decreases in response to an improvement in forecast accuracy even though moral hazard decreases in the long run indemnity payments are likely to increase in the long run driven by the increase in moral hazard when the forecast indicates bad crop conditions we use the results of our model to discuss the potential impact of different technologies and types of inputs on the federal crop insurance program and the environment

insurance moral hazard and chemical use in agriculture this paper examines how crop insurance affects corn farmers fertilizer and pesticide use in the u s midwest crop insurance might be expected to affect chemical use because of moral hazard insured farmers may undertake riskier production than do uninsured farmers results suggest that insurance exerts considerable influence on corn farmers chemical use decisions those purchasing insurance applied significantly more nitrogen per acre 19 spent more on pesticides 21 and treated more acreage with both herbicides and insecticides 7 and 63 than did those not purchasing insurance these results suggest that both fertilizer and pesticides may be risk increasing inputs

on bias correction in the multivariate sample selection model heien and wessells two step estimator for the multivariate sample selection model has been used extensively during the past 15 years a modified version of it with slightly different selectivity regressors has also appeared in the empirical literature both estimators are unfounded and generally do not correct for the sample selectivity bias as intended but have continued to gain popularity in empirical applications the properties of the modified heien wessells procedure are investigated in both the bivariate and multivariate contexts and the conditions under which this estimator fails to correct for sample selectivity are examined the theoretical properties are demonstrated with a simulated random sample

assessing cost effectiveness of the conservation reserve program crp and interactions between the crp and crop insurance we examine the u s conservation reserve program crp enrollment design while accounting for the crp s interactions with the federal crop insurance program we find that the current crp is not cost effective despite its intent to balance benefits and costs based on crp contract level data we show that adopting a cost effective enrollment design and incorporating crop insurance subsidies into the crp s environmental benefits index would significantly increase the crp acreage environmental benefits and savings on crop insurance subsidies while leaving government outlay unchanged large geographical redistributions of crp acreage would also occur we further investigate the cost effective design s robustness to crp benefit misspecifications

an empirical analysis of the demand for multiple peril crop insurance knowledge of factors affecting farmer purchases of crop insurance is essential for evaluating the soundness and profitability of crop insurance programs despite this importance the demand for crop insurance has received limited empirical attention the present paper reports on an empirical assessment of the demand for crop insurance by iowa corn producers adverse selection in the insured pool suggests that producers with differing levels of loss risk have different demand elasticities loss risk is included in the empirical analysis and is found to influence the elasticity of demand results show average demand elasticities of about 0 32 for relative insured acres and 0 73 for liability per planted acre implications for the actuarial soundness of the industry are provided

the demand and supply of external finance for innovative firms access to finance has figured prominently in the debate on barriers to firm growth even though existing empirical research has not found conclusive evidence of a finance gap moreover it is not clear to what extent innovation aggravates financial constraints and what role innovation inputs processes and outputs play in the market for external capital in this article we analyze how firm level innovation affects i the likelihood of seeking external finance and ii the likelihood of obtaining it we analyze an original data set of 3095 uk and us firms small and medium size enterprises and middle market containing information on firms innovation behaviors performance and finances for the period 2002 2004 controlling for firm specific characteristics we provide novel and extensive evidence on the links between innovation in its input process and output dimensions and the demand for external capital and its supply

impacts of federal crop insurance on land use and environmental quality this article integrates economic and biophysical models to assess how federal crop revenue insurance programs affect land use cropping systems and environmental quality in the u s corn belt region the empirical framework includes econometric models that predict land conversion and crop choices at the parcel level based on expectation and variance of crop revenues land quality climate conditions and physical characteristics at each site the predictions are then combined with site specific environmental production functions to determine the effect of revenue insurance on nitrate runoff and leaching soil water and wind erosion and carbon sequestration results suggest that federal crop insurance has on average a small effect on conversions of non cropland to cropland and somewhat more significant impacts on crop choice and crop rotation these changes in cropping systems have on average small impacts on agricultural pollution

crop insurance acreage decisions and nonpoint source pollution the redirection of farm policy in the 1996 farm bill has generated much interest in seeking environmentally friendly and economically viable ways to protect farm income agricultural insurance has been suggested as such an instrument this article estimates the effect of crop insurance on crop mix and the resulting change in chemical use in the central nebraska basin providing corn insurance will shift land from hay and pasture to corn which will increase chemical use at the extensive margin this extensive margin effect dominates the effect of crop insurance on the application rate leading to an increase in total chemical use

the demand for multiple peril crop insurance evidence from montana wheat farms an econometric analysis of the demand for multiple peril crop insurance is carried out for a sample of 370 montana wheat farms the study is the first to model the farm s participation and coverage level decisions separately through heckman two stage estimation procedures these decisions are shown to be determined in different ways in addition farms with positive expected returns from insurance make coverage level decisions in different ways from farms with negative expected returns these differences indicate that adverse selection effects limit the efficacy of across the board premium rate increases as mechanisms for reducing loss ratios

the effect of microinsurance on economic activities evidence from a randomized field experiment we report results from a large randomized field to study how access to formal microinsurance affects production and economic develop ment we induce exogenous variation in insurance coverage at the village level by randomly assigning performance incentives to the village animal husbandry worker who is responsible for signing farmers up for the insur ance we find that promoting greater adoption of insurance significantly increases farmers sow production and this effect seems to persist in the longer run moreover the increase in sow production in response to the sow insurance does not seem to be the result of the substitution of other livestock

an empirical analysis of acreage effects of participation in the federal crop insurance program the extent to which crop insurance programs have resulted in additional land being brought into production has been a topic of considerable debate we consider multiequation structural models of acreage response insurance participation crp enrollment and input usage our analysis focuses on corn and soybean production in the corn belt and wheat and barley production in the upper great plains our results confirm that increased participation in insurance programs provokes statistically significant acreage responses in some cases though the response is very modest in every case in the most extreme cases 30 decreases in premiums as a result of increased subsidies provoke acreage increases ranging from 0 2 to 1 1 a number of policy simulations involving increases in premium subsidies are considered

the impact of ad hoc disaster and crop insurance programs on the use of risk reducing conservation tillage practices the paper estimates the impacts of risk reducing government programs on the use of conservation tillage no till and other conservation tillage practices in agriculture conservation tillage can be used to reduce production risk from weather shocks however subsidized crop insurance and disaster payments also reduce risk through financial assistance the paper examines the extent to which risk reducing tillage practices and government programs are substitutes for each other the economic model shows that a decline in average weather conditions increases the use of conservation tillage the economic model also shows that the impact of weather risk and risk aversion on risk reducing practices like conservation tillage are ambiguous the effect depends on the degree that losses are offset by government payments the paper uses county level tillage practice data from the conservation tillage information center for the three state region of iowa nebraska and south dakota results are estimated using instrumental variables and spatial panel data techniques instruments for the program participation and payment data include political variables and weather data the empirical analysis shows that recent disaster and indemnity payments are associated with an increase in the use of no till and a decrease in the use of other conservation till results also show that producers in counties with recent drought and flood events are more likely to use other conservation tillage the results imply that there may be unintended impacts of changes to agricultural policies like disaster payments and crop insurance on the use of on farm conservation practices

effects of crop insurance premium subsidies on crop acreage crop insurance premium subsidies affect patterns of crop acreage for two reasons first holding insurance coverage constant premium subsidies directly increase expected profit which encourages more acreage of insured crops direct profit effect second premium subsidies encourage farms to increase crop insurance coverage with more insurance coverage farms obtain more subsidies and farm revenue becomes less variable as indemnities offset revenue shortfalls so acreage of insured crops likely increases indirect coverage effect by exploiting exogenous policy changes and using approximately 180 000 county crop year observations we estimate the sum of these two effects of premium subsidies on the pattern of u s acreage across seven major field crops we estimate that a 10 increase in the premium subsidy causes a 0 43 increase in the acreage of a crop in a county holding the premium subsidy of its competing crop constant taking into account the small share of premium subsidies in expected crop revenue this subsidy impact is analogous to an own subsidy acreage elasticity of 1 24 which exceeds own price acreage elasticity estimates in the literature one explanation for the larger acreage response to premium subsidies is that insurance causes an indirect coverage effect in addition to a direct profit effect

futures prices in supply analysis are instrumental variables necessary citation nathan p hendricks joseph p janzen aaron smith futures prices in supply analysis are instrumental variables necessary american journal of agricultural economics volume 97 issue 1 1 january 2015 pages 22 39 https doi org 10 1093 ajae aau062

input use under cost of production crop insurance theory and evidence there have been a number of previous studies that examined the effects of yield or revenue based crop insurance products on input use of farmers however no study has specifically investigated the input use impacts of a cost of production cop crop insurance policy even though this type of crop insurance is the predominant one used in several other countries outside of the united states such as the philippines and china this article aims to theoretically and empirically examine the effect of a cop crop insurance product on farmers chemical input use our theoretical model suggests that the effect of cop insurance on input use can either be positive or negative with the resulting impact depending on the strengths of a the traditional moral hazard effect of insurance i e an input use decreasing effect versus b the marginal incentives to apply more inputs due to input levels being the main determinant for expected indemnity amounts in this type of insurance i e an input use increasing effect a survey data set from corn farmers in the philippines is then used to empirically illustrate how a particular cop insurance product influences input use in a real life context in this case we find that cop insurance increases the use of chemical inputs e g fertilizers and total chemical expenditure implying that the positive marginal incentive to apply more inputs dominates the negative moral hazard effect

does the samaritan s dilemma matter evidence from u s agriculture the samaritan s dilemma posits a downside to charity recipients may rely on free aid instead of their own efforts anecdotally the expectation of free assistance is thought to be important for decisions about insurance and risky behavior in numerous settings but reliable empirical evidence is scarce we estimate whether the samaritan s dilemma exists in u s agriculture where both private crop insurance and frequent federal disaster assistance are present we find that bailout expectations are qualitatively and quantitatively important for the insurance decision furthermore aid expectations reduce both expenditure on farm inputs and subsequent crop revenue jel d72 h84 q18

completing an economics phd in five years although the median time to degree for economics phds was near 5 5 years in 2002 and appears to be rising stock and siegfried 2006 some students can and do earn the degree in under five years of 586 individuals who began phd study in economics in 2002 27 percent had a diploma they could display on their office wall by fall 2007 many economics phd programs advertise that it normally takes five years to earn the degree some programs encourage completion by limiting financial aid to five years students who take more than five years incur high opportunity costs of remaining in school as their completing an economics phd in five years let the data literally speak for themselves

sodbusting crop insurance and sunk conversion costs we build a real option model that articulates sodbusting incentives arising from risk interventions in the presence of conversion costs the model shows that risk interventions reduce expected costs of switching land use between cropping and noncropping activities and hence incentivize sodbusting based on data for south central north dakota over 1989 2012 our simulations show that offsetting 20 of a cropping return shortfall by a risk intervention increases the sodbusting cost threshold below which sodbusting will occur by 41 or 43 7 acre omitting cropping return risk across time underestimates the sodbusting cost threshold by 23 or 24 35 acre and hence underestimates sodbusting caused by crop production

crop insurance policies and purchases in france while many crop insurance systems have been reformed around the world few academic researches have addressed the determinants of the decision on crop insurance at the farm s micro level in this article both the financial and the agricultural literature lead to the identification of many rationales for the crop insurance decision using data from the period 2003 2006 on a representative survey of french farms fadn rica we investigate the different factors that incite farmers to insure against crop risk we emphasize that the highest risk farms are more likely to have insurance and this decision is positively related to the past amount of claims insurance is subscribed by larger farms because insurance appears too expensive for smaller farms which are indeed naturally less diversified interestingly financial variables such as capital structure or return on investment do not significantly determine the insurance decision