bluuebunny/crossref_metadata_2025 huggingface dataset:
The Distribution of Welfare Gains from International Price Stabilization under Distortions
Authors: Just Richard E. , Lutz Ernst , Schmitz Andrew , Tumovsky Stephen
Published: July 2006

In a two‐country model with distortions and general demand and supply functions, the welfare implications of international price stabilization are analyzed. The degree of nonlinearity of the excess demand function in the free trade exporting country as well as the distortions are found to be of crucial importance in determining who gains from stabilization. With a high degree of nonlinearity, producers in both countries as well as the exporting country as a whole lose from stabilization, whereas consumers in both countries and the importing country gain. This is contrary to previous results with linearity.
The Structure of Production and the Derived Demand for Inputs in Canadian Agriculture
Authors: Lopez Ramon E.
Published: July 2006

The evidence suggests that an aggregate cost function and, hence, an aggregate production function for Canadian agriculture exists. Furthermore, growth in Canadian agriculture has been primarily associated with economies of scale rather than with factor‐augmenting technical change. A nonhomothetic dual cost function is used to derive explicitly the system of four input demand equations (labor, capital, land and structures, and intermediate inputs) using time‐series data for the period 1946–77. Estimates of the own‐price elasticities and of the Hicks‐Allen elasticities of substitution among the input pairs are also provided.
Price Endogenous Mathematical Programming As a Tool for Sector Analysis
Authors: McCarl Bruce A. , Spreen Thomas H.
Published: July 2006

The question, “Why use a mathematical programming model at the sectoral level?” is addressed. To address this question, discussion is presented mathematically and verbally upon mathematical programming sector models in which both price and quantity are endogenous variables. The discussion covers both the theoretical properties and the empirical concerns which must be faced in applying such models. Discussion is also presented upon the usefulness of the modeling approach for policy analysis. Selected bibliograpic citations' use of the approach in policy analysis are given.
The Welfare Effects of Erosion Controls, Banning Pesticides, and Limiting Fertilizer Application in the Corn Belt
Authors: Taylor C. Robert , Frohberg Klaus K.
Published: July 2006

The partial welfare effects of alternative erosion control methods, banning insecticides, banning herbicides, and limiting nitrogen fertilizer in the Corn Belt are examined. The estimated welfare effects are partial since they reflect the change in consumers' plus producers' surplus arising from the production and consumption of corn, soybeans, wheat, oats, hay, and pasture but not the environmental benefits associated with pollution abatement or the administrative and enforcement cost of the policies. A large linear programming model of crop production in the Corn Belt was used to make the estimates.
The Influence of Consumer Price Information on Retail Pricing and Consumer Behavior
Authors: Devine D. Grant , Marion Bruce W.
Published: July 2006

Comparative price information for major Ottawa supermarkets was collected over a twenty‐eight‐week period and published in daily newspapers during a five‐week test period. In response to the information, the dispersion of prices across stores and chains narrowed, the average level of prices of the market dropped, and consumer satisfaction increased relative to the control market. Consumers transferred patronage to the lower priced stores. Consumers indicated a willingness to pay 34¢ per week on average for the price comparison information. Estimated consumer benefits far exceeded the cost of the program.
Price Distortions in Agriculture and Their Effects: An International Comparison
Authors: Bale Malcolm D. , Lutz Ernst
Published: July 2006

The central thesis of this paper is that agricultural pricing policies pursued by developing countries produce effects which are diametrically opposite to those produced by the pricing policies of many developed countries, and that the policies of both are costly in terms of global welfare. In general, the agricultural sector in developing countries is heavily taxed while that in the developed countries receives substantial price protection. The effects of agricultural price distortions on output, consumption, trade, and rural employment are estimated for nine countries. In addition, the effects of price distortions on the distribution of income between producers and consumers, on government revenue and foreign exchange, and the net social losses of the policies are calculated.
Participation in Farm Commodity Programs: A Stochastic Dominance Analysis
Authors: Kramer Randall A. , Pope Rulon D.
Published: July 2006

The net benefits of participation in farm commodity programs are analyzed with a normative risk model based on stochastic dominance theory. Utilizing entire probability distributions of participation and nonparticipation net returns, the impacts of alternative program features and farm size are investigated. Small changes in program parameters are found to affect participation decisions. It also is demonstrated that farm size can influence participation choices.
The Potential Role of Multilevel Programming in Agricultural Economics
Authors: Candler Wilfred , Fortuny‐Amat Jose , McCarl Bruce
Published: July 2006

This paper discusses a new class of problem related to mathematical programming but with two separate decision makers in hierarchical relationship, each with his own objective function and control over distinct but interacting variables. The relationship of this problem to agricultural (energy and environmental) policy problems is developed, together with the relationship of this new problem structure to mathematical programming, game theory, control theory, and principal agent theory. Suggested computational approaches are reviewed, along with the solution to two illustrative examples of the use of the technique.
A Carcass Merit Pricing System for the Pork Industry
Authors: Hayenga Marvin L. , Grisdale Barbara S. , Kauffman Robert G. , Cross H. Russell , Christian Lauren L.
Published: July 2006

A small proportion of hogs sold to packers are priced according to their carcass value, and some producers feel that price incentives for lean hogs are inadequate. Pork carcass composition and value relationships were analyzed for a sample of 185 pork carcasses. Carcass weight, back fat thickness, and muscling index accounted for 79% of the variations in carcass value; these factors were incorporated into a standardized payoff matrix providing larger incentives for better carcasses which could be incorporated into individual packer procurement systems.
Landownership and the Adoption of Minimum Tillage
Authors: Lee Linda K. , Stewart William H.
Published: July 2006

Full‐owner operators and landowners with small holdings have lower minimum tillage adoption rates on cultivated cropland than do other landownership groups after accounting for land quality and regional location. Nonfamily corporate structure does not significantly influence the adoption decision. These conclusions about minimum tillage adoption were obtained from a logit model using 7,649 cultivated cropland observations from across the United States. This study indicates that small operating size poses more of an obstacle to minimum tillage adoption than does separation of ownership from farm operation.
A Model of Cooperative Finance
Authors: VanSickle John J. , George W. Ladd
Published: July 2006

The unique characteristics of cooperatives require they be analyzed differently from the more traditional noncooperative firm. A model of cooperative finance is developed that has the objective of maximizing the total, after‐tax profits of the cooperative member patrons. A mathematical analysis derives the relationships among the various financial instruments, and a numerical analysis derives results for a cooperative under various hypothesized scenarios. We suggest that a model incorporating the unique characteristics of cooperatives is the more appropriate tool for studying cooperative finance than is the noncooperative model.
Theory of the Firm with Joint Price and Output Risk and a Forward Market
Authors: Grant Dwight
Published: July 2006

Expected utility maximizing farmers facing just price risk or both price risk and quantity risk behave similarly in the absence of a forward market. If forward contracting is possible, that is not true because variation in the commodity price affects a farmer's wealth through the value of his futures position, the value of his output and through the covariance between price and output. This covariance affects a farmer's optimal scale of production, his optimal forward position and the interrelationship between the scale of production and forward trading.
Production Risk and Optimal Fertilizer Rates: A Random Coefficient Model
Authors: Smith Joyotee , Umali Gloria
Published: July 2006

This paper demonstrates that low levels of fertilizer use on rainfed rice in the Philippines cannot be attributed to production risk. A random coefficient model estimated the objective probability distribution of yield. This was incorporated into a utility‐maximization framework to predict that moderately risk‐averse farmers would apply only seven to ten kilograms less than the profit‐maximizing N‐rate. Previous studies have established that risk was not a major impediment to fertilizer use in irrigated areas. This paper extends this conclusion to rainfed rice production in the Philippines.
The Structure of Food Demand: Interrelatedness and Duality
Authors: Heien Dale M.
Published: July 2006

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.
Bee Pollination and Productivity Growth: The Case of Alfalfa
Authors: Olmstead Alan L. , Wooten Donald B.
Published: July 2006

The spread of commercial pollination has received little attention in the literature analyzing the growth in U.S. agricultural productivity. Between World War I and 1960, growers of most fruits, nuts, and seeds came to realize that intensive bee pollination was essential to achieve high yields. Alfalfa seed growers were among the last groups to adopt commercial pollination. This article examines the dramatic impact that concentrating bees in alfalfa seed fields had on yields, which resulted in the restructuring of the alfalfa industry (the fourth most valuable commodity grown in the United States) in the 1950s.
A Farm Firm Model of Machinery Investment Decisions
Authors: Reid Donald W. , Bradford Garnett L.
Published: July 2006

This article presents a multiperiod mixed integer programming (MMIP) model of optimal machinery decisions. Infinite horizon valuation models of replacement and other investment situations are conceptualized in the context of a finite programming model. Dual properties of the MMIP model are used to identify and value opportunity costs involved in investment decisions of farm machinery. The interdependent nature of investment and production relationships necessary for solving these values emphasizes the importance of a holistic firm perspective in analyzing farm machinery investment strategies. An empirical situation is used to demonstrate model application.
Dynamic Equilibrium in Markets for Perennial Crops
Authors: Knapp Keith C.
Published: July 2006

A dynamic equilibrium model for perennial crop markets is formulated. Price expectations are formed according to perfect foresight, and both the age composition of the crop and the optimal rotation are determined endogenously. The model is applied to the California alfalfa market. The calculated long‐run equilibrium acreage is quite close to average acreage over the base period. The results also exhibit cyclical fluctuations in acreage with a six percent coefficient of variation. Thus, cyclical behavior can arise from technical characteristics of the production process as well as from imperfectly formed expectations or random exogenous shocks.
Measurement of Consumer Gains from Market Stabilization
Authors: Wright Brian D. , Williams Jeffrey C.
Published: July 2006

For most cases of practical significance in which partial equilibrium analysis is appropriate, there is little difference between exact measures of consumer gains from market stabilization and approximations such as expected change in marshallian or hicksian consumer surplus. Careful specification of the nature of stabilization is more crucial than the choice of welfare measure. It is important to represent correctly the demand curvature and supply response and to determine whether general equilibrium responses can be ignored. In any event, an improved analytical approximation and a simple numerical method for calculating the exact measures make it unnecessary to rely on suspect measures.
The Structure of Constant Elasticity Demand Models
Authors: LaFrance Jeffrey T.
Published: July 2006

The demand model with constant price and income elasticities has been used extensively in applied agricultural economics. This paper analyzes the structure of incomplete systems of constant elasticity demand functions. It is demonstrated that there is a duality theory for incomplete demand systems that is analogous to the duality theory for complete systems. This theory permits the recovery of that portion of the direct and indirect preferences pertaining to the goods of interest, and we can calculate exact welfare measures for changes in income and in the prices of these goods. For an incomplete system of constant elasticity demands, the Slutsky symmetry restrictions for integrability are presented and the implied structure of the direct and indirect preferences with respect to the prices and goods of interest is derived.
Ranking of Agricultural Economics Departments by Citations
Authors: Beilock Richard P. , Polopolus Leo C. , Correal Mario
Published: July 2006

Ranking of agricultural economics departments based upon the number of articles or article pages does not take into account the impact or usefulness of these journal articles or other works to the profession. In this paper, an alternative ranking scheme is employed which utilizes citations from a broad array of publications of a department's faculty. Rankings are developed for agricultural economics units at 1862 land grant universities, 1890 land grant universities, independent U.S. universities, and Canadian universities, as well as an overall composite ranking and comparisons with economics departments.
Consumer Demand for Rice Grain Quality and Returns to Research for Quality Improvement in Southeast Asia
Authors: Unnevehr Laurian J.
Published: July 2006

Abundant world rice supply has led to renewed interest in improving grain quality of modem rice varieties. Implicit prices of grain characteristics are estimated for Thailand, Indonesia, and the Philippines. These prices are used to evaluate rice‐breeding goals and to estimate returns to research for quality improvement. Results indicate that the past focus on physical quality improvement was appropriate, and future welfare gains are possible from chemical quality improvement. Returns to quality improvement are substantial and indicate underinvestment in this type of research.
Valuing Information When Risk Preferences Are Nonneutral: An Application to Irrigation Scheduling
Authors: Bosch Darrell J. , Eidman Vernon R.
Published: July 2006

A method for valuing information when risk attitudes are nonneutral is presented. The procedure uses simulation and generalized stochastic dominance to value information by level of risk aversion. The value of soil water and weather information to irrigators is quantified to illustrate the procedure. The empirical results show that additional information has diminishing marginal returns for a given level of risk aversion and that the value of information increases with the level of risk aversion. The application demonstrates the importance of valuing information on a whole‐firm basis when returns to information are related to returns of other firm enterprises and risk preferences are nonneutral.
Demonstration of the Use of Lower Partial Moments to Improve Safety‐First Probability Limits
Authors: Atwood Joseph
Published: July 2006

A general stochastic inequality is presented which utilizes lower partial moments to generate sharp upper bounds on safety‐first type probabilities. Alternative forms of the inequality often generate less conservative probability bounds than Chebychev's mean‐standard error and Berck and Hihn's mean‐semivariance inequalities. Of particular interest is the linear lower partial moment version which utilizes absolute deviations below a fixed reference point. A constraint is developed which, if enforced in an optimization model, guarantees that safety‐first probability concerns are satisfied while selecting the least constraining level for the reference point.
Marginal Analysis of Welfare Costs of Environmental Policies: The Case of Pesticide Regulation
Authors: Lichtenberg Erik , Parker Douglas D. , Zilberman David
Published: July 2006

We present a methodology for estimating net social welfare costs and their distribution using only information on price, quantities, elasticities of supply and demand, and estimates of cost and/or yield effects of policies provided by natural scientists. An application to a case of pesticide regulation demonstrates the importance of equity effects. Simulations show that redistribution of income among producers becomes the dominant effect of pesticide policies when supply elasticities are higher and demand elasticities are lower, with changes in supply elasticity having a greater impact than changes in demand elasticity. For crops with significant export markets, foreign consumers are shown to bear much of the short‐run cost.
Chance‐Constrained Financing as a Response to Financial Risk
Authors: Atwood Joseph A. , Watts Myles J. , Helmers Glenn A.
Published: July 2006

The results of a recent survey suggest that many decision makers view financial risk in a safety‐first context. Imposing safety‐first chance constraints on potential financial ratios or flows can be difficult with traditional methods. This is particularly true with financial ratios when both the numerator and denominator are random and are affected by endogenous decisions. A model and numerical example are presented which enforce probabilistic or chance constraints upon potential debt/asset ratios in a multiperiod linear program. The model can be easily modified to probabilistically constrain alternative financial performance measures such as current ratios, working ratios, or cash flows.
Food Aid Impacts in Rural Kenya
Authors: Bezuneh Mesfin , Deaton Brady J. , Norton George W.
Published: July 2006

Assessing the potential role of food aid in economic development requires that analytical attention be given to both household production and consumption consequences of food aid projects. Effects of a food‐for‐work (FFW) project in rural Kenya are assessed using a peasant‐household‐firm model which incorporates a linear programming model and an almost ideal demand system. The results indicate that program participants have net returns 52 percent higher than nonparticipants, most of which is due to induced effects of capital formation on own‐farm production. Greater capital formation increases the opportunity cost of participants' time, encouraging a transition over time from FFW activities to greater own‐farm production. FFW increases food demand, employment, and marketable surplus.
Deforestation and Agricultural Productivity in the Côte d'Ivoire
Authors: Ehui Simeon K. , Hertel Thomas W.
Published: July 2006

An optimal control model is used to determine the optimal steady‐state forest stock in the Côte d'Ivoire. This stock is shown to increase with increases in the forestry returns relative to those in agriculture. Technological progress in agriculture and increases in the social discount rate serve to lower the optimal steady‐state forest stock. Based on an estimated aggregate yield function, the optimal forest stock is shown to be most sensitive to changes in the social rate of discount. Assuming current (1985) technology, deforestation appears socially optimal only for values of the discount rate greater than 8%.
Exchange Rate Uncertainty and the Demand for U.S. Soybeans
Authors: Anderson Margot , Garcia Philip
Published: July 2006

This study examines the effects of exchange rate uncertainty on bilateral soybean trade flows and finds that imports for Japan, France, and Spain are sensitive to short‐term variations in nominal bilateral exchange rates. This research extends previous work by focusing on bilateral trade for a single commodity, using a longer sample period, and testing over a variety of model specifications. The results suggest that the effects vary across countries depending on access to forward markets, the availability of alternative soybean suppliers, the degree of market concentration in the domestic soybean processing sector, and the degree of currency risk importers are willing to assume.
The Effects of Suburbanization on Agriculture
Authors: Lopez Rigoberto A. , Adelaja Adesoji O. , Andrews Margaret S.
Published: July 2006

This article conceptualizes the effects of suburban population density and land speculation on agricultural production choices, prices, and profits. A dual profit function model and a system of reduced‐form price equations are used to estimate these effects for New Jersey. Results show that vegetable production is the only subsector to benefit from suburbanization, while livestock is the most adversely affected. Suburbanization reduces responsiveness to agricultural prices and discourages capital and land use. The overall impact on profits is positive when capital gains on land are included. Policy implications for farmland preservation and “right to farm” legislation are discussed.
Choice of Depreciation Methods for Farm Firms
Authors: Musser Wesley N. , Tew Bernard V. , White Fred C.
Published: July 2006

Accelerated depreciation methods are usually considered to increase the present value of after‐tax cash flows for farm firms compared to straight line methods. Review of the theoretical foundations of this conclusion indicates that it requires an assumption of constant marginal income tax rates, which is inappropriate for many farm firms. Numerical analysis of a more general theoretical model and a detailed capital budgeting example both indicate that straight line methods are preferred with income tax rates below maximum levels and/or lower discount rates. General recommendations on depreciation methods are therefore impossible.
Dynamic Analysis of Income Taxes on Farm Firms
Authors: Hardesty Sermin D. , Carman Hoy F. , Moore Charles V.
Published: July 2006

A dynamic optimization model is used to analyze the effects of tax law changes instituted by the Economic Recovery Tax Act of 1981 on farm firm decision making. The model incorporates the integrated nature of the firm's production, investment, and financing decisions. Because of interactions between tax provisions, the tax changes had the unexpected effect of reducing optimal investment in machinery and land.
On Moral Hazard and Cost Sharing under Sharecropping
Authors: Bardhan Pranab , Singh Nirvikar
Published: July 2006

In this article we show that when the tenant's input use is not observable by the landlord, there will be cost sharing at the margin (instead of a lump sum transfer) if the standard model is extended to include cases of imperfection and interlinkage of transactions in rural markets, thus making the opportunity cost of inputs different for the landlord and the tenant.
Orderly Marketing for Lemons: Who Benefits?
Authors: Carman Hoy F. , Pick Daniel H.
Published: July 2006

The orderly marketing goal of federal marketing orders may deal with price stability or uniform flow of product to market, a choice which can have important economic implications. This study examines the impact of four fresh lemon marketing strategies on returns at the producer, FOB, and retail levels, together with marketing margins and consumer surplus. Producers, as a group, and consumers should favor a constant price strategy. Some individual producers and middlemen, however, enjoyed higher returns with constant weekly sales. Explanations of the shift in lemon sales patterns which occurred during the 1970s is examined in light of these results.
Planting Flexibility and Land Allocation
Authors: Westcott Paul C.
Published: July 2006

Break‐even price relationships between competing crops ate derived to illustrate how planting flexibility alternatives affect planting choices. The primary factor differentiating among flexibility alternatives is whether deficiency payments are linked to planting choices. If they are, target prices, program yields, and, in some cases, acreage reduction programs affect net returns comparisons and crop competition. Deficiency payments may be separated from the planting decision on some land either by removing deficiency payments for the acreage involved or by continuing them regardless of the crop planted. Planting choices then would be based on expected net returns from the marketplace.
Dual Second‐ and Third‐Order Translog Models of Production
Authors: Driscoll Paul J. , Boisvert Richard
Published: July 2006

Monte Carlo evidence indicates that translog cost and profit models are generally incapable of accurately characterizing the underlying production technology. In order to discriminate between tracking difficulties caused by truncation of important high‐order terms and errors in variable bias, Monte Carlo experiments are performed with secondand third‐order cost and production models, using data generated with and without measurement error. The results suggest that it is errors in variables bias and not the translog specification, which is largely responsible for the poor tracking performances noted previously.
Animal Stocking under Conditions of Declining Forage Nutrients
Authors: Huffaker Ray G. , Wilen James E.
Published: July 2006

This paper examines the bioeconomic conditions under which the recently popular intensive‐early‐stocking (IES) strategy outperforms the conventional season‐long‐stocking (SLS) strategy as a response to the deterioration of forage nutrients over the latter stages of the grazing season. The economic performances of the IES and SLS strategies are compared to a dynamically optimal grazing policy that continually fine tunes stocking rates to account for declining forage nutrients. The comparisons yield a range of qualitative properties under which the IES strategy tends to approximate better the optimal strategy, some of which are investigated in a numerical illustration.
Economic Returns to Crop Management Research in a Post‐Green Revolution Setting
Authors: Traxler Greg , Byerlee Derek
Published: July 2006

Returns to research studies have neglected research on crop management (CMR), which may account for half of all crop research. Because CMR enhances the efficiency of input use, returns to CMR are hypothesized to increase in settings characterized by high input levels and high yields. A method is developed to estimate returns to CMR, and this method is applied to wheat research in a post‐green revolution setting in northwest Mexico. The results suggest that returns to CMR are positive over a range of model assumptions.
An Analysis of 1980s Dairy Programs and Some Policy Implications
Authors: Bausell Charles W. , Smith Scott L. , Belsley David A.
Published: July 2006

Excessive government purchases of dairy surpluses during the early 1980s prompted three corrective measures: the Milk Diversion Program, Dairy Termination Program, and lower support prices. An eight‐equation econometric model of the dairy sector simulates these programs and shows them to be incomplete or impermanent in their effects. However, further analysis shows that a more aggressive policy of lower support prices would be effective in reducing costs to government and consumers, and lowering transfers to producers.
On the Design of Agricultural Policy Mechanisms
Authors: Chambers Robert G.
Published: July 2006

The fact that different agricultural policy mechanisms have emerged for different commodities suggests that the choice of policy instrument may reflect the goals of agricultural policy makers. This paper uses the principles of mechanism design under asymmetric information to examine the motivations underlying the choice of agricultural policy mechanisms. It is found that supply control mechanisms favor high‐cost producers and the budget, while mechanisms resulting in overproduction favor low‐cost producers.
Agricultural Bank Portfolio Adjustments to Risk
Authors: Pederson Glenn D.
Published: July 2006

An asset allocation model is developed in which the bank's problem is one of selecting the mix of loan assets and securities that will generate desired levels of portfolio return and risk. A reduced‐form, econometric model is derived and historical rural bank asset allocations are predicted. Asset equations show consistency with the framework of equilibrium adjustments under uncertainty. Higher expected default rates on variable rate loans result in significant joint effects, which alter a bank's optimal allocation.
Ex Ante Evaluation of the Economic Impact of Agricultural Biotechnology: The Case of Porcine Somatotropin
Authors: Lemieux Catherine M. , Wohlgenant Michael K.
Published: July 2006

Introduction of a new growth hormone, porcine somatotropin, will have a significant impact on the U.S. pork industry. Ex ante effects are estimated using a linear elasticity model, which accounts for interrelationships between domestic and international markets for hogs and pork, different adoption rates and lengths of run for supply, and consumer demand shifts from leaner pork. The paper shows how to use experimental data to quantify production function and supply shifts. Results indicate that, for a five‐year adjustment period, producers' surplus will increase between $@@‐@@250 million and $@@‐@@720 million; consumers' surplus will increase between $@@‐@@900 million and $@@‐@@1.95 billion.
Incomplete Markets and Government Agriculture Policy
Authors: Innes Robert D. , Rausser Gordon C.
Published: July 2006

This paper investigates the welfare effects of several stereotypical agricultural policies in an economy with production risk and incomplete contingent claim markets. The policies analyzed include target price/deficiency payment programs (the Brannan Plan), production controls (the Cochrane Plan), and land set‐asides. When there is no trading in contingent claims and when economic parameters take on values characteristic of staple food markets, the paper finds that a joint Brannan Plan—production control program is often welfare increasing. However, production controls on their own tend to be welfare decreasing. In addition, land set‐asides are generally welfare reducing, even in the presence of a Brannan plan. These results are derived analytically in a simple equilibrium model. They are illustrated with a numerical example which demonstrates that welfare benefits from typical agricultural policy interventions can be large.
Factor Price Stabilization and the Competitive Firm
Authors: Devadoss S. , Choi E. Kwan
Published: July 2006

This paper investigates the effects of factor price stabilization on production decisions of the competitive firm with ex post production flexibility. Factor price stabilization is achieved through changes in the guaranteed minimum price and the imposed maximum price. For the risk‐averse firm, the effect of factor price stabilization, through a mean‐preserving contraction, on capital crucially depends on whether capital and the variable input are substitutes or complements as well as the observable characteristics of the variable input demand curve.
Measuring the Potential Contribution of Plant Breeding to Crop Yields: Flue‐Cured Tobacco, 1954–87
Authors: Babcock Bruce A. , Foster William E.
Published: July 2006

Measurements are made of plant breeders' success in increasing potential flue‐cured tobacco yields from 1954 to 1987 in North Carolina. Nongenetic sources of yield increases are measured by the yield levels of a standard variety. New genetic material accounted for between 20% and 35% of yield increases on research station plots in the three tobacco‐growing regions. Recent genetic contributions have been small. The slowdown is not attributable to a federal tobacco policy shift in 1965 that slowed the growth in grower yields. There is also no evidence that tobacco breeders increased their output in response to the Plant Variety Protection Act of 1970.
Dynamic Adjustment in the Japanese Livestock Industry Under Beef Import Liberalization
Authors: Wahl Thomas I. , Hayes Dermot J. , Williams Gary W.
Published: July 2006

Dynamic adjustment of Japanese livestock markets is analyzed under two alternative import policies: the 1988 Japanese Beef Market Access Agreement (BMAA) and complete liberalization of Japanese beef import policies. Modeling problems associated with these policies include the change from a quota to a tariff, the incorporation of a meat demand system derived from utility‐maximizing behavior into a livestock policy model, complementarity, and changes in the degree of producer supply responsiveness under alternative policies. An econometric model of the Japanese livestock industry is used to simulate and compare the impacts of the two policies from 1988 through 1997.
Testing the Stability of Preferences: A Nonparametric Approach
Authors: Sakong Yong , Hayes Dermot J.
Published: July 2006

A test for preference stability is developed that strengthens existing nonparametric procedures. The test uses indifference curve convexity to restrict (unobservable) compensated consumption bundles. Adding up, noninferiority, and the Slutsky equation are used to limit the range of these compensated consumption bundles. A program is proposed that simultaneously measures the changes in consumption quantities satisfying the theoretical restrictions and the expenditure elasticities minimizing the required changes. The program is applied to meat consumption data and is shown to be capable of detecting small changes in preference.
Forecasting Performance of Corn and Soybean Harvest Futures Contracts
Authors: Kenyon David , Jones Eluned , McGuirk M. Anya
Published: July 2006

In contrast to earlier periods, post 1973 spring prices of December corn and November soybean futures contracts have not been good forecasts of harvest price. Regression analysis of price forecast variance before and after 1973 indicates that the decline in forecasting accuracy is related to increased yield forecast errors and to reduced interference of government loan rates on market price determination. Since these futures are poor forecasts, producers should not rely on futures prices alone to allocate resources at planting time unless they simultaneously forward price.
Separability in State‐Level Agricultural Technology
Authors: Lim Hongil , Shumway C. Richard
Published: July 2006

A nonparametric analysis of separability in agricultural production technology was conducted using state‐level data. Both deterministic (exhaustive search) and stochastic (measurement error) tests were performed. The empirical findings do not rule out a reasonable amount of data aggregation, both among inputs and among outputs. The nature and extent of the justified aggregation varies widely among states, supporting the notion that the structure of agricultural production varies in important ways across states.
Relative Agricultural Prices and Monetary Policy
Authors: Lapp John S.
Published: July 2006

An imperfect information, rational expectations model of relative price determination is presented. This model provides an econometric specification for testing for a causal relationship between money and the relative prices of agricultural commodities. Test results indicate that variations in the growth rate of the nominal money supply (whether anticipated or unanticipated) have not been an important influence on the average level of prices received by farmers relative to other prices in the economy over the period 1951–85.
Exchange Rate Risk and U.S. Agricultural Trade Flows
Authors: Pick Daniel H.
Published: July 2006

This paper analyzes the effect of exchange rate risk on U.S. agricultural trade flows. A model which incorporates exchange rate risk is applied to ten countries. While exchange rate risk was not significant in the seven developed markets, results indicate that the exchange rate variable adversely affected U.S. agricultural exports to the three developing countries used in the analysis. These findings underscore the importance of exchange rate risk in developing countries trading behavior. Issues such as establishment of well‐developed financial and commodity markets in developing countries must be addressed in future research.
The RLS Positive‐Part Stein Estimator
Authors: Adkins Lee C. , Hill R. Carter
Published: July 2006

The RLS Stein‐rule estimator of the classical normal linear regression model is formed by taking a linear combination of the least squares and restricted least squares estimators. Using a simple analytical device, we prove that the convex combination known as the RLS positive‐part Stein estimator dominates the conventional version under weighted quadratic loss. Possible uses for the positive‐part estimator in economic and agricultural economic research are discussed.
Some Neglected Social Costs of Government Spending in Farm Programs
Authors: Alston Julian M. , Hurd Brian H.
Published: July 2006

Economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending. Recent literature suggests that the marginal opportunity cost of a dollar of U.S. federal government spending is more likely to be in the range of $@@‐@@1.20 to $@@‐@@1.50. This implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates. In addition, the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending.
Supply Analysis in an Oligopsony Model
Authors: Chen Zhigang , Lent Rebecca
Published: July 2006

Primary agricultural markets are often characterized by oligopsony. This paper investigates the effect of an agricultural product supply shift on the equilibrium prices and quantities of farm products purchased by food processors. and on profits of food processors. The principal comparative static result indicates that, under oligopsony, qualitative implications of a disturbance in the supply of raw input differ from that under perfect competition and monopsony. Effects of other disturbances are identical in sign to the perfectly competitive case, although magnitudes may differ. Implications for supply estimation and agricultural policy analysis are briefly discussed.
Feeder Cattle Forecasting Models: An Econometric Study of Development and Performance
Authors: Wilson Christine A.
Published: July 2006

The purpose of this paper is to identify whether an intricate forecasting model which takes into consideration selling price, cost of gain, and seasonality will perform better at forecasting quarterly feeder cattle prices than a simpler model based only on the futures price of feeder cattle. Although both models exhibited good forecasting ability, econometric calculations demonstrated that the complex model had more accurate forecasting ability than did the futures model. Both models performed similarly in their ability to predict the directional movement of feeder cattle price.
A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing
Authors: Peterson Everett B. , Connor John M.
Published: July 2006

Capitalizing on theoretical advances in calculating deadweight welfare losses due to imperfect competition, we compare eight empirical estimates for the U.S. food manufacturing industries. The estimates incorporate varying theoretical assumptions about demand, supply, and firm pricing behavior; and utilize various data sources, time periods, and assumptions about the proper competitive benchmark. While the estimates of average allocative losses range widely, there is a high degree of congruence in the rankings of economic losses due to market power. Thus, from the perspective of efficient antitrust enforcement, the newer theoretical oligopoly approaches and the traditional structure‐conduct‐performance models would target similar industries.
Demand for an Undergraduate Education in the Agricultural Sciences
Authors: Thompson Richard P. , Capps Oral , Massey Joseph G.
Published: July 2006

Undergaduate enrollments in the agricultural and natural resource sciences (AGNR) declined during the 1980s. The present study sought to analyze factors affecting the drop in demand for an AGNR education. Two time‐series pooled models were employed: a household production function (HPF) variant and a Mincerian human capital form. The HPF variant offers the empirical advantage of a price expression that accounts for changes in AGNR demand beyond significant wealth, structural, regional, and gender effects. High opportunity costs of AGNR careers stalled demand during the 1980s—a problem that may persist for some AGNR career areas.
Heterogeneous Preferences and Aggregation in Environmental Policy Analysis: A Landfill Siting Case
Authors: Swallow Stephen K. , Weaver Thomas , Opaluch James J. , Michelman Thomas S.
Published: July 2006

In many studies of nonmarket resources, economists have data to disaggregate results according to subpopulations within the full study population. Disaggregated results can increase the usefulness of economic analyses, improve public confidence in the results, and permit public officials to assess equity concerns. We outline an approach to obtain disaggregated results when characteristics of individuals may identify distinct preferences. The approach is applied to public preferences regarding landfill siting decisions. The discussion explores the implications of disaggregated results for policy decisions, for bias in aggregate willingness‐to‐pay estimates, and for nonmarket research methodologies.
Optimal Replacement and Management Policies for Beef Cows
Authors: Frasier W. Marshall , Pfeiffer George H.
Published: July 2006

Beef cow replacement studies have not reflected the interaction between herd management and the culling decision. We demonstrate techniques for modeling optimal beef cow replacement intervals and discrete management policies by incorporating the dynamic effects of management on future productivity when biological response is uncertain. Markovian decision analysis is used to identify optimal beef cow management on a ranch typical of the Sandhills region of Nebraska. Issues of breeding season length, winter nutrition, and replacement are investigated. Results illustrate the importance of nutrition management in the replacement decision.
Government Institutional Effects on the Value of Seasonal Climate Forecasts
Authors: Mjelde James W. , Thompson Troy N. , Nixon Clair J.
Published: July 2006

The impact of government institutions on the value of improved climate forecasts is examined. Results suggest that crop insurance and earned income tax credit have little effect on the expected change in after‐tax cash flows. Federal tax law has only a modest influence. As expected, the disaster program decreases the value of improved climate forecasts. With no price changes, the farm program lowers the value of the forecasts because of the acreage reduction provisions. With at least some price decreases, the farm program increases the value of climate forecasts. Here, the price supports override the acreage reduction provisions.
Cigarette Taxes and Smoking Restrictions: Impacts and Policy Implications
Authors: Brown A. Blake
Published: July 2006

The effects of recently proposed increases in cigarette excise taxes and smoking restrictions on tobacco prices and quantities, quota lease rates, and revenues to tobacco‐producing areas are analyzed. The price elasticity of demand for U.S. cigarette exports is estimated. Proportionally similar increases in smoking restrictions or cigarette taxes are shown to have effects of similar magnitude on cigarette consumption. A policy of reducing price instead of the quantity produced is found to minimize the impact of increased taxes and smoking restrictions on revenues to tobacco‐producing areas.
A Theoretical and Empirical Evaluation of the Functional Forms Used to Estimate the Food Expenditure Equation of Food Stamp Recipients
Authors: Levedahl J. William
Published: July 2006

The food expenditure equation of food stamp recipients is obtained as a generalization of Roy's identity. This equation rationalizes a larger marginal propensity to spend on food out of food stamps than out of income, and is an alternative to the traditional Southworth formulation. The only previously estimated functional form found to be flexible is due to Senauer and Young. Estimates of this specification using data from the San Diego Cash‐Out Demonstration illustrates that flexibility is important. An example of welfare reform demonstrates that substantial errors can occur if flexibility is ignored.
Measuring the Marginal Cost of Nonuniform Environmental Regulations
Authors: Sunding David L.
Published: July 2006

A method is presented for measuring the marginal welfare cost of environmental regulations affecting agriculture. The method incorporates output market effects and recognizes diversity in production conditions among crops, regions, and seasons. An important advantage of the method is that only regional outputs and changes in regional production costs are needed to calculate deadweight loss, thus simplifying the measurement of welfare changes. This feature of the model is significant since the complexity and substantial data requirements of most existing impact models cause many environmental regulations to be enacted with inadequate analysis of their economic impacts. The method also disaggregates welfare impacts by crop, place, and time, thus encouraging the implementation of nonuniform interventions that achieve a given level of environmental quality more efficiently than uniform policies.
Second‐Best Tax Policies to Reduce Nonpoint Source Pollution
Authors: Larson Douglas M. , Helfand Gloria E. , House Brett W.
Published: July 2006

Control of nonpoint source pollution often requires regulation of inputs, but first‐best solutions are unattainable. Because inputs are monitored by different agencies and regulatory coordination can be costly, it may be more practical to regulate single inputs. A cost‐effectiveness approach to determining the best single‐input tax policy is developed and applied to the question of reducing nitrate leaching from lettuce production in California. Water is the best single input to regulate, and efficiency losses from this second‐best approach appear not to be great. Conditions for the welfare ranking of policies to be invariant to heterogeneity in production or leaching are identified.
Farmer Response to Modified Crop Insurance: A Case Study of Corn in Indiana
Authors: Vandeveer Monte L. , Loehman Edna T.
Published: July 2006

This study examines the potential effects on crop insurance of more detailed yield risk classifications combined with alternative premium‐setting techniques, and higher yield guarantees combined with coinsurance. Corn producers in Tippecanoe County, Indiana, were surveyed for their responses to these changes. Response to area yield insurance is also evaluated. The modified MPCI program, area yield insurance, and two types of disaster payment programs are also compared in terms of their costs and coverage.