bluuebunny/crossref_metadata_2025 huggingface dataset:
Unilateral Resource Management in a Two‐Country General Equilibrium Model of Trade in a Renewable Fishery Resource
Authors: Emami Ali , Johnston Richard S.
Published: March 2003

We explore the effects of free trade in a renewable natural resource between two countries in the presence of incomplete property rights. While resource management by one country may benefit one or both trading partners, we demonstrate that resource management by only one of the partners may reduce welfare for both, when compared to the case in which neither manages its resource sector. These trade‐induced losses may be reduced through import tariffs and production subsidies on the resource good or by permitting harvest beyond the rent‐maximizing level. Our preliminary work suggests that the World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) policy makers should not always insist on free trade and resource management. Rather, they must pay careful attention to the particular relationships between trade conditions and natural resource policies among trading nations.
The Impact of the Canada‐United States Free Trade Agreement on U.S. Wine Exports
Authors: Heien Dale , Sims Eric N.
Published: March 2003

On 1 January 1989 the Canada‐United States Free Trade Agreement went into effect. The agreement reduced the restrictions on the importation and marketing of wine produced in the United States. This article analyzes the impact of this lessening on United States wine exports to Canada. A demand relation for United States exports to Canada is estimated and then used to decompose the effects into their proximate causes. These causes are (a) own‐price and exchange rate effects, (b) substitute price and exchange rate effects, (c) changes in real income in Canada, (d) tariff removal effects, and (e) removal of nontariff trade barriers by Canada.
Trade Liberalization and Agricultural Chemical Use: United States and Mexico
Authors: Williams Shon P. , Shumway C. Richard
Published: March 2003

To anticipate the likely effects of recent trade agreements with Mexico on the environment and food safety, this paper examines changes in agricultural chemical use. Econometric estimation and simulation suggest that the combined effects of the North American Free Trade Agreement (NAFTA), economic growth, research investment, and farm policy are expected to increase chemical usage substantially in the United States and undoubtedly lead to greater groundwater contamination. In Mexico, the expected effects are a substantial increase in fertilizer use but a decrease in pesticide use. Increases in private research investment are expected to increase the use of both types of chemicals, but increases in public research investment in the United States are not.
Aggregation without Separability: Tests of the United States and Mexican Agricultural Production Data
Authors: Davis George C. , Lin Ni , Shumway C. Richard
Published: March 2003

The generalized composite commodity theorem (GCCT) and testing procedure is extended to test for consistent aggregation of the United States and Mexican agricultural production data in each category for which earlier tests rejected homothetic separability. Nonrejected GCCT and separability hypotheses provide empirical support for aggregating all the United States agricultural outputs into as few as two categories: crops and livestock. Mexican agricultural outputs also can be aggregated into as few as two categories. Support for aggregating all outputs into a single category is ambiguous in both countries and is only provided by the GCCT.
Optimal Temporal Policies in Fluid Milk Advertising
Authors: Vande Kamp Philip R. , Kaiser Harry M.
Published: March 2003

This study develops an approach to obtain optimal temporal advertising strategies when consumers' response to advertising is asymmetric. Using this approach, optimal strategies for generic fluid milk advertising in New York City are determined. Results indicate that pulsed advertising policies are significantly more effective in increasing demand than a uniform advertising policy. Sensitivity analyses show that the optimal advertising policies are insensitive to reasonable variations in interest rates and the inclusion of milk demand seasonality in the model. Also less asymmetric responses to advertising are found to result in shorter optimal pulsing cycles and reduced intensity of advertising pulses.
No Such Thing as a Free Safe Lunch: The Cost of Food Safety Regulation in the Meat Industry
Authors: Antle John M.
Published: March 2003

This study develops theoretical and econometric cost function models for the meat industry to test the hypothesis of safety exogeneity, i.e., that product safety does not affect productive efficiency. Using plant‐level data from the Census of Manufactures, this hypothesis is rejected. Estimates of the impacts of food safety regulation on variable cost of production in the beef, pork, and poultry industries show that the efficiency costs of food safety regulations could plausibly exceed benefits estimated by the U.S. Department of Agriculture. Costs of regulation per pound of meat are found to be size neutral for all but the smallest plants.
Scale Economies and Consolidation in Hog Slaughter
Authors: MacDonald James M. , Ollinger Michael E.
Published: March 2003

We use establishment based panel data to estimate a cost function which identifies the role of scale economies in hog slaughter consolidation. We find modest but extensive technological scale economies in the 1990s, and they became more important over time. But wages rose sharply with plant size through the 1970s, and those wage premiums generated a pecuniary scale diseconomy that largely offset the effects of technological scale economies. The size‐wage relation disappeared in the 1980s; with growing technological scale economies and disappearing pecuniary diseconomies, large plants realized growing cost advantages over smaller plants, and production shifted to larger plants.
Efficient Redistribution Using Quotas and Subsidies in the Presence of Misrepresentation and Cheating
Authors: Giannakas Konstantinos , Fulton Murray
Published: March 2003

This paper introduces misrepresentation and cheating into the policy analysis of output quotas and subsidies. Analytical results show that when cheating occurs output quotas are a less efficient means of income redistribution than is traditionally believed. As well, cheating increases the transfer efficiency of output subsidies. The result is that an all‐or‐nothing choice between quotas and subsidies will generally favor the use of subsidies. A combination of quotas and subsidies, however, usually remains the most efficient means of income redistribution through market intervention.
Surplus Distribution from the Introduction of a Biotechnology Innovation
Authors: Falck‐Zepeda José Benjamin , Traxler Greg , Nelson Robert G.
Published: March 2003

We examine the distribution of welfare from the introduction of Bt cotton in the United States in 1996. The welfare framework explicitly recognizes that research protected by intellectual property rights generates monopoly profits, and makes it possible to partition these rents among consumers, farmers, and the innovating input firms. We calculate a total increase in world surplus of $@@‐@@240.3 million for 1996. Of this total, the largest share (59%) went to U.S. farmers. The gene developer, Monsanto, received the next largest share (21%), followed by U.S. consumers (9%), the rest of the world (6%), and the germplasm supplier, Delta and Pine Land Company (5%).
Convergence in U.S. Productivity Growth for Agriculture: Implications of Interstate Research Spillovers for Funding Agricultural Research
Authors: McCunn Alan , Huffman Wallace E.
Published: March 2003

State crop, livestock,and aggregate agricultural total factor productivity (TFP) data, 1950–82, are examined for evidence of convergence to a single TFP level (σ‐convergence) or to a steady state rate of growth (β‐ or conditional convergence). Our empirical results do not support σ‐convergence but do support β‐convergence. The rate of β ‐convergence is variable and depends on research and development (R…D) spillins from other states,private R…D, and farmers' schooling. The finding of strong positive interstate spillover effects implies that independent state planning of agricultural research is inefficient and cooperation across states boundaries including establishment of new political jurisdictions for financing public agricultural research can enhance efficiency.
Foreign Transfers and Tropical Deforestation: What Terms of Conditionality?
Authors: van Soest Daan , Lensink Robert
Published: March 2003

The international community considers the possibility of using aid as an instrument to improve natural resource conservation in developing countries. By making the amount of transfers dependent on the efforts of the recipient countries to improve conservation, appropriate incentives can be given. We propose a transfer function in which developing countries are linearly rewarded for having a positive stock of forest, andwhere the amount of donations is negatively relatedto the rate of deforestation. This transfer function enables the international community to improve long‐term forest conservation as well as the rate of deforestation during the adjustment period.
Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?
Authors: Abrahams Nii Adote , Hubbell Bryan J. , Jordan Jeffrey L.
Published: March 2003

A multinomial selection model of averting behavior in response to water contamination risks is estimatedfor Georgia residents. Measures of non‐health related water quality (taste, odor, and appearance) are incorporated into the model to account for joint production of utility and health. The model examines the choice between bottled, filtered tap, and unfiltered tap water. Results of the estimation indicated that perceived risk from tap water, concern about water quality (taste, odor, and appearance of tap water), race, and age are the most important determinants of bottled water selection. Information regarding current or prior problems with tap water, perceived risk from tap water, and income are the most important determinants of water filter selection. Adjusting for quality differences between tap and bottled water, we show that averting costs estimates using bottled water expenditures would lead to an overstatement of avoidance costs by about 12%.
A Semiparametric Distribution for Willingness to Pay and Statistical Inference with Dichotomous Choice Contingent Valuation Data
Authors: An Mark Yuying
Published: March 2003

This paper proposes a semiparametric willingness to pay distribution and discusses several aspects of statistical inference with dichotomous choice contingent valuation data. We study likelihood‐based estimation of the model parameters with and without controlling for unobserved heterogeneity, estimation of the mean and median willingness to pay, and specification tests. These statistical procedures are implemented using a data set. In this application we find that a parametric model is rejected in favor of our semiparametric model, that the heterogeneity can be adequately controlled using a simple density, and that the semiparametric model offers more robust mean willingness to pay estimates.
The Composition of Rural Employment Growth in the “New Economy”
Authors: Wojan Timothy R.
Published: March 2003

This article examines changes in the patterns of occupational employment in urban and rural labor markets in seven southern states between 1970 and 1990. A method is developed for assessing whether occupational employment patterns are becoming more differentiated over time. The analysis identifies a process of increasing similarity across all occupational groups between 1970 and 1980. In contrast, the 1980–90 period is characterized by increasing rural specialization in Operator (low‐skill) occupations amid increasing similarity in four of nine inclusive occupational categories. These results provide partial support for conjectures regarding greater differentiation of tasks performed in rural and urban labor markets.
Broiler Production Contracts as a Multi‐Agent Problem: Common Risk, Incentives and Heterogeneity
Authors: Goodhue Rachael E.
Published: March 2003

The broiler industry presents two puzzles regarding production contracts: why do processors control growers' inputs, and why do they use a statistically insufficient estimator to calculate growers' compensation? This paper provides an agency theoretic framework that explains these puzzles in terms of processors' response to grower heterogeneity and production risk and to grower risk aversion. Processors control inputs to reduce the information rents paid to agents. By forcing agents to bear additional income risk through the use of an imprecise estimator, processors can increase profits, due to the combined moral hazard‐adverse selection nature of the informational problem.
Setting Efficient Incentives for Agricultural Research: Lessons from Principal‐Agent Theory
Authors: Huffman Wallace E. , Just Richard E.
Published: March 2003

A conceptual analysis of important issues in the organization and management of academic research is presented. Principal‐agent theory is applied to derive optimal compensation schemes for scientists when they differ in ability, risk aversion, cost of effort, and reservation utility, and to show the optimal trade‐off between institutional risk and scientists' abilities. Implications for an efficient organization of research are derived, including how scientists' incentives should be structured to elicit optimal research efforts and direction, whether research direction should be centralized or decentralized, and whether the organization of research should be through external competitive grantsor program and institutional funding.
Size and Productivity in the U.S. Milling and Baking Industries
Authors: Buccola Steven , Yoko Fujii , Yin Xia
Published: March 2003

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.
Hedging Multiple Price Uncertainty in International Grain Trade
Authors: Haigh Michael S. , Holt Matthew T.
Published: March 2003

Commodity and freight futures contracts are analyzed for their effectiveness in reducing uncertainty for international traders. A theoretical model is developed for a trader exposed to several types of risk. OLS hedge ratio estimation is compared to the SUR and the multivariate GARCH methodologies. Explicit modeling of the time‐variation in hedge ratios via the multivariate GARCH methodology, using all derivatives, and taking into account dependencies between prices, results in reductions in risk, even after accounting for transaction costs. Results confirm that while the commodity futures contracts are important for hedging risk, freight futures are a useful mechanism for reducing risk.
The Demand for Hedging and the Value of Hedging Opportunities
Authors: Frechette Darren L.
Published: March 2003

Hedging strategies typically assume that hedging is costless and that only one futures market exists. When these assumptions are dropped, the demand for hedging is shown to depend on basis risk, price risk, and the hedger's risk preference. The marginal and incremental value of hedging opportunities are computed for the general cases of one and two markets and applied to the specific case of Pennsylvania dairy input hedging.
A Strong Test of the von Liebig Hypothesis
Authors: Berck Peter , Geoghegan Jacqueline , Stohs Stephen
Published: March 2003

An implication of the von Liebig hypothesis is that crop‐production functions have right‐angle isoquants. This article presents a nonparametric estimation of right‐angle isoquant production functions. It then describes a new test for right‐angle isoquants. The procedures are used to test experimental data on corn and wheat.
Investment under Uncertainty and Dynamic Adjustment in the Finnish Pork Industry
Authors: Pietola Kyösti S. , Myers Robert J.
Published: March 2003

A stochastic dual model of investment under uncertainty is used to investigate structural adjustment in the Finnish hog industry. Value function restrictions are found to be comparable to those in existing dual models assuming deterministic state variables. The model also allows for an asymmetry in investment response during capital expansion and contraction phases. Empirical results show that investments respond negatively to increased uncertainty and that labor adjusts more slowly during contraction phases than during expansions. Results on economies of size, uncertainty effects, and adjustment rigidities have important implications for hog industry response to Finland's entry into the EU.
Land Tenure and the Adoption of Conservation Practices
Authors: Soule Meredith J. , Tegene Abebayehu , Wiebe Keith D.
Published: March 2003

We use a logit adoption model with data on 941 U.S. corn producers from the 1996 Agricultural Resource Management Study to analyze the influence of land tenure on the adoption of conservation practices. We extend previous analyses by distinguishing renters according to lease type and by distinguishing practices according to the timing of costs and returns. We find that cash‐renters are less likely than owner‐operators to use conservation tillage, but share‐renters are not. Both cash‐renters and share‐renters are less likely than owner‐operators to adopt practices that provide benefits only over the longer term (grassed waterways, stripcropping, and contour farming).
The Interstate River Compact as a Water Allocation Mechanism: Efficiency Aspects
Authors: Bennett Lynne Lewis , Howe Charles W. , Shope James
Published: March 2003

Interstate river compacts are widely used to allocate water among riparian states. Twenty‐one compacts are currently in force in the western United States, and these compacts are mostly of two types: those that allocate a fixed amount or flow of water to individual states; and those that allocate percentages of available water to the riparian states. This study compares the performance of the two resulting allocations with that resulting from basin‐wide optimization without compact constraints. While widely varying hydrologic and economic characteristics of river basins create a large set of possible outcomes, a range of stylized case studies indicates that percentage compacts are likely to generate greater net benefits and to result in more equitable risk‐sharing than fixed compacts under many circumstances. In light of recent compact negotiations in the southeastern United States, it is recommended that efficiency analyses under present and future conditions be made a part of all compact negotiations.
Government Spending, Growth and Poverty in Rural India
Authors: Fan Shenggen , Hazell Peter , Thorat Sukhadeo
Published: March 2003

Using state‐level data for 1970–93, a simultaneous equation model was developed to estimate the direct and indirect effects of different types of government expenditure on ruralpoverty and productivity growth in India. The results show that in order to reduce rural poverty, the Indian government should give highest priority to additionalinvestments in ruralroads and agriculturalresearch. These types of investment not only have much larger poverty impacts per rupee spent than any other government investment, but also generate higher productivity growth. Apart from government spending on education, which has the third largest marginalimpact on ruralpoverty and productivity growth, other investments (including irrigation, soil and water conservation, health, and rural and community development) have only modest impacts on growth and poverty per additional rupee spent.
Decomposing Input Adjustments under Price and Production Uncertainty
Authors: Chambers Robert G. , Quiggin John
Published: March 2003

A decomposition of input adjustments for stochastic technologies is developed and applied to the case of actuarially fair production insurance. The decomposition consists of a pure‐risk effect and an expansion effect which are analogous to the Hicks‐Allen decomposition familiar from consumer theory.
The Joint Influence of Agricultural and Nonfarm Factors on Real Estate Values: An Application to the Mid‐Atlantic Region
Authors: Hardie Ian W. , Narayan Tulika A. , Gardner Bruce L.
Published: March 2003

County level farmland and residential housing values are estimated for the Mid‐Atlantic region as a function of farm returns, developed land values, household incomes, population densities, and location. Results are based on the hypothesis that farmland owners anticipate land development and that nonfarm factors are important determinants of farmland prices. Response of farmland prices to change in farm returns is found to be inelastic and relatively uniform in rural and urban counties. Response to nonfarm factors is found to be more elastic and substantially greater in rural counties.
Measuring the Welfare Effects of Nutrition Information
Authors: Teisl Mario F. , Bockstael Nancy E. , Levy Alan
Published: March 2003

Cost/benefit analysis justifies regulations altering the amount of health‐related information presented to consumers. The current method of benefit analysis, the cost of avoided illness, is limited; it assumes the benefits of health‐related information are adequately represented by changes in illnesses. The manuscript develops a benefit estimation method to measure the welfare impacts of providing nutrient information. Nutrient labeling significantly affects purchase behaviour but may not lead to increased consumption of health foods. Nutrient labeling may increase welfare without any change in health risk. Thus, the cost of avoided illness approach can underestimate the social benefits of providing nutrient information.
Transaction Costs and Cattle Marketing: The Information Content of Seller‐Provided Presale Data at Bull Auctions
Authors: Chvosta Jan , Rucker Randal R. , Watts Myles J.
Published: March 2003

At sales out breeding bulls, prospective buyers have strong incentives to undertake presale measurement activities. To reduce these transaction costs, sellers often provide information on sale bulls. We examine the information content of two measures of the expected performance of the bulls and find that within a given herd, older, simpler measures of performance contain more information about prices (from buyers' perspectives) than newer, more sophisticated measures known as expected progeny differences, or EPDs. We also find, however, that buyers appear to pay considerable attention to annual changes in herd‐average EPD values when comparing animals from different sellers.
Agricultural Markets as Relative Performance Evaluation
Authors: Hueth Brent , Ligon Ethan
Published: March 2003

Relative performance schemes such as tournaments are commonly used in markets for a variety of livestock and processing commodities, while explicit versions of these schemes are rarely used in markets for fresh fruits and vegetables and specialty grains. We show how contracts for these latter commodities do in fact provide relative performance incentives, albeit indirectly, via a payment mechanism that depends on market prices. In such contracts, compensation is often an increasing function of revenue; this implements a relative performance scheme by making each grower's payment an increasing function of his own output but a decreasing function of other's output.
The Effect of Farmland Preservation Programs on Farmland Prices
Authors: Nickerson Cynthia J. , Lynch Lori
Published: March 2003

Government agencies in urbanizing areas are increasingly utilizing purchase and transfer of development rights programs to preserve farmland and protect local farm economies. This article tests the effect of development restrictions imposed by permanent easement sales on farmland sales prices, using Maryland data. We correct for selectivity bias due to the voluntary nature of these programs in estimating hedonic sales equations. Although preserved parcels' actual land values are lower, the effect of the restrictions is not statistically significant. These findings may encourage additional participation in preservation programs or justify reductions in the easement prices paid by agencies.
Estimating Crop‐Specific Production Technologies in Chinese Agriculture: A Generalized Maximum Entropy Approach
Authors: Zhang Xiaobo , Fan Shenggen
Published: March 2003

A generalized maximum entropy approach is adapted to empirically estimate crop‐specific production technologies in Chinese agriculture. Despite a modest behavioral assumption about equal marginal returns of nonland inputs among crops, this method does not require price information, which is usually distorted in a centrally planned economy such as China. A multi‐output technology for Chinese agriculture is estimated and input allocations for each province are recovered simultaneously. The estimated multi‐output production technology and input allocations imply that China may have greater grain production potentials than previously thought.
Econometric‐Process Models for Integrated Assessment of Agricultural Production Systems
Authors: Antle John M. , Capalbo Susan M.
Published: March 2003

This article develops the conceptual and empirical basis for a class of empirical economic production models that can be linked to site‐specific biophysical models for use in integrated assessment research. Site‐specific data are used to estimate econometric production models, and these data and models are then incorporated into a simulation model that represents the decision‐making process of the farmer as a sequence of discrete and continuous land‐use and input‐use decisions. An econometric‐process model of the dryland grain production system of the Northern Plains demonstrates the capabilities of this type of model to simulate decision making both within and outside the range of observed data.
Evaluating Environmental Risks Using Safety‐First Constraints
Authors: Qiu Zeyuan , Prato Tony , McCamley Francis
Published: March 2003

This article incorporates an upper partial moment concept into a linear programming model to impose safety‐first environmental constraints. The model is linear and deterministic, treats a discrete sample as an empirical distribution, and optimizes over the column space. It allows a decision maker to specify the objectives and the compliance probabilities with the objectives when making decisions, and endogenously determines the risk levels. Even though it is presented in the context of environmental management, the model is general enough to be extended to other situations where the probability of a variable exceeding some target or standard is restricted.
Two Nested Constant‐Elasticity‐of‐Substitution Models of Recreational Participation and Site Choice: An ‘Alternatives’ Model and an ‘Expenditures’ Model
Authors: Morey Edward R. , Breffle William S. , Greene Pamela A.
Published: March 2003

Two demand models of recreational participation and site choice are developed: an alternatives model and an expenditures model. Both assume maximization of utility over the year, so allow for diminishing marginal utility. They do not impose the restrictive assumption that where one goes on a trip is independent of where one plans to go on other occasions. Estimation is with a nested constant‐elasticity‐of‐substitution preference ordering: it is relatively easy to estimate because of global regularity, it allows sites to be complements, and it has the potential to be locally flexible. The application is to Atlantic salmon fishing.
Empirical Specification Requirements for Two‐Constraint Models of Recreation Choice
Authors: Larson Douglas M. , Shaikh Sabina L.
Published: March 2003

Two‐constraint models are common in recreation‐demand analysis because of the important role time can play in consumer choices. Two versions of Roy's identity hold for these models and imply coefficient restrictions on empirical demand functions. The two‐constraint restrictions are fully observable and can be expressed in a form analogous to the Slutsky‐Hicks equations in single‐constraint consumer models. Empirical specifications that use full prices and full budgets can be consistent with the two‐constraint models, when the marginal value of time is either exogenous or endogenous, but models with full prices and money income alone are not.
A Comparison of Conjoint Analysis Response Formats
Authors: Boyle Kevin J. , Holmes Thomas P. , Teisl Mario F. , Roe Brian
Published: March 2003

A split‐sample design is used to evaluate the convergent validity of three response formats used in conjoint analysis experiments. We investigate whether recoding rating data to rankings and choose‐one formats, and recoding ranking data to choose one, result in structural models and welfare estimates that are statistically indistinguishable from estimates based on ranking or choose‐one questions. Our results indicate that convergent validity of ratings, ranks, and choose one is not established. In addition, we find that people frequently use ‘ties’ in responses to rating questions, and that the option not to choose any of the alternatives (‘opt‐out’) affects some preference estimates.
Technological Change and Welfare in an Open Economy with Distortions
Authors: Perrin Richard K. , Fulginiti Lilyan E.
Published: March 2003

Traditional measures of technological change, such as the rate of technical change, are based on producer‐oriented prices. Here, we employ a general equilibrium analysis of an open economy to examine how the consumer welfare gain from a technological change, measured as Hicksian equivalent variation, is related to the rate of technical change, the biases of the technological change, and tax distortions in the economy. An analytical solution shows these relationships in a readily computable framework, and demonstrates that the rate of technical change will equal the rate of welfare change in only very unrealistic cases.
The Impact of Negativity on Separability Testing
Authors: Eales James , Henderson Jason R.
Published: March 2003

During separability testing, it has not been common practice to verify if the data satisfy the negativity condition. The impacts of imposing negativity on separability test results are examined for two groups of commodities using Barten's generalized demand system and with Monte Carlo simulations. Results indicate that imposing negativity did not alter model estimates when negativity was spontaneously satisfied. Also, imposing negativity rarely altered separability test results when the data did not spontaneously satisfy negativity.
Preference Uncertainty in Non‐Market Valuation: A Fuzzy Approach
Authors: van Kooten G. Cornelis , Krcmar Emina , Bulte Erwin H.
Published: March 2003

In this article, we consider uncertain preferences for non‐market goods, but we move away from a probabilistic representation of uncertainty and propose the use of fuzzy contingent valuation. We assume that a decision maker never fully knows her own utility function and we treat utility as a fuzzy number. The methodology is illustrated using data on forest valuation in Sweden. Fuzzy contingent valuation provides estimates of resource value in the form of a fuzzy number and includes estimates obtained using a standard probabilistic approach.
A Roll Call Analysis of the Endangered Species Act Amendments
Authors: Mehmood Sayeed R. , Zhang Daowei
Published: March 2003

Public choice economics view legislative process as a transaction in the political market. Interest groups demand regulation in their favor and lobby lawmakers. The lawmakers analyze an assortment of factors and supply legislation to the winning group, thereby maximizing their rent from the political market. This article examines Endangered Species Act (ESA) amendments from a public choice perspective. Congressional voting on the ESA amendments are assessed using a model based on political incentive and ideology. The results show that the lawmakers' voting behavior is correlated with their party affiliation, ideology, and several characteristics of their home state, such as number of endangered species, proportion of urban population, contribution of the natural resources and construction sectors in gross state product, and geographical location
Price Cycles and Asymmetric Price Transmission in the U.S. Pork Market
Authors: Miller Douglas J. , Hayenga Marvin L.
Published: March 2003

Economists have proposed several plausible explanations for observed price transmission asymmetries in commodity markets. Unfortunately, the econometric methods commonly used in such studies cannot empirically distinguish pricing behavior under the competing theories. We argue that the theories may be classified by firm responses to high‐ and low‐frequency price cycles and use Engle's band spectrum regression to test the symmetry of high‐ and low‐frequency cycles in weekly pork prices. The findings indicate that changes in wholesale prices are asymmetrically transmitted to retail prices in relatively low‐frequency cycles, which does not support search costs and other high‐frequency explanations. Conversely, wholesale pork prices asymmetrically adjust to changes in farm prices at all frequencies.
The Extent, Pattern, and Degree of Market Integration: A Multivariate Approach for the Brazilian Rice Market
Authors: González‐Rivera Gloria , Helfand Steven M.
Published: March 2003

The extent, pattern, and degree of integration are analyzed in a multivariate system with cointegrating restrictions. The extent of the market is found by identifying locations that are linked by trade and where prices share identical long‐run information (permanent component). The pattern of integration characterizes interdependence and is analyzed by estimating a vector error correction model. The degree of integration is calculated with persistence profiles of the long run relations. We demonstrate that bivariate models are inadequate for capturing the spatial dynamics of price adjustment. The methodology is applied to the Brazilian rice market and policy implications are discussed.
Beggar‐Thy‐Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs
Authors: Alston Julian M. , Freebairn John W. , James Jennifer S.
Published: March 2003

Profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities. The resulting tendency toward excessive advertising is exacerbated by check‐off funding. To analyze this beggar‐thy‐neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups, and a scenario where they optimize independently. In an illustrative example using 1998 data for U.S. beef and pork, the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum.
Welfare Effects of an Export Tax: Thailand's Rice Premium
Authors: Warr Peter G.
Published: March 2003

An empirically based, applied general equilibrium model is used to study the welfare and distributional effects of an export tax when the implementing country possesses some monopoly power in the world market. A method is demonstrated through which a general equilibrium model can be used to find the optimal value of a tax or subsidy. The approach makes it possible to conduct the welfare analysis of a particular intervention in an explicit “second‐best” context, to study its income distributional implications, and to explore the sensitivity of the results to variations in key behavioral parameters, structural assumptions, and the government's distributional objectives.
Differences in Social and Public Risk Perceptions and Conflicting Impacts on Point/Nonpoint Trading Ratios
Authors: Horan Richard D.
Published: March 2003

If stochastic nonpoint pollution loads create socially costly risk, then an economically optimal point/nonpoint trading ratio—the rate point source controls trade for nonpoint controls—is adjusted downward (a risk reward for nonpoint controls), encouraging more nonpoint controls. However, in actual trading programs, ratios are adjusted upward in response to nonpoint uncertainties (a risk premium for nonpoint controls). This contradiction is explained using a public choice model in which regulators focus on encouraging abatement instead of reducing damages. The result is a divergence of public and social risk perceptions, and a trading market that encourages economically suboptimal nonpoint controls.
Farmland Prices in the Presence of Transaction Costs: A Cautionary Note
Authors: Lence Sergio H.
Published: March 2003

Explicit consideration of transaction costs is highly relevant for modeling farmland price behavior in a realistic manner. Unfortunately, there are numerous theoretical and empirical difficulties associated with doing so. From a research standpoint, such difficulties greatly increase the likelihood of mistakes in the theoretical derivations and/or in the design and application of empirical methods, thereby undermining the validity of the ensuing findings. This article highlights these issues by discussing the theoretical and empirical pitfalls of two seminal recent articles analyzing farmland prices in the presence of transaction costs.
Why Farmers Quit: A County‐Level Analysis
Authors: Goetz Stephan J. , Debertin David L.
Published: March 2003

We identify the effects of alternative explanatory variables on the propensity of U.S. farmers to cease farming, with a particular emphasis on understanding the roles of off‐farm employment and federal farm program payments. Conventional ordinary least squares analysis using all counties suggests that off‐farm employment has no statistical effect on the (net) number of farmers quitting between 1987 and 1997, ceteris paribus. A more refined analysis, which separates counties losing farmers from those that gained farmers, reveals subtle and less clear‐cut effects of off‐farm employment (and federal program payments) on farm exits.
Why don't Lenders Finance High‐Return Technological Change in Developing‐Country Agriculture?
Authors: Blackman Allen
Published: March 2003

Most of the literature attributes credit constraints in small‐farm developing‐country agriculture to the variability of returns to investment in this sector. But the literature does not fully explain lenders' reluctance to finance investments in technologies that provide both higher average and less variable returns. This article develops an information‐theoretic credit market model with endogenous technology choice. The model demonstrates that lenders may refuse to finance any investment in a riskless high‐return technology—regardless of the interest rate they are offered—when they are imperfectly informed about loan applicants' time preferences and, therefore, about their propensities to default intentionally in order to finance current consumption.
The Effects of Housing Prices, Wages, and Commuting Time on Joint Residential and Job Location Choices
Authors: So Kim S. , Orazem Peter F. , Otto Daniel M.
Published: March 2003

An empirical model of joint decisions of where to live and where to work demonstrates that individuals make residential and job location choices by trading off wages, housing prices, and commuting costs. Wages are higher in metropolitan markets, but housing prices are also higher in urban areas. Consumers can live in lower priced nonmetropolitan houses and still earn urban wages, but they incur commuting costs that increase with distance from the city. Improvements in transportation that lower commuting time will increase nonmetropolitan populations and will increase the number of nonmetropolitan commuters to metropolitan markets. Equal wage growth across labor markets causes a shift in relative population from rural to urban markets, while an equiproportional increase in housing prices causes a population shift toward rural areas.
Improving Statistical Efficiency and Testing Robustness of Conjoint Marginal Valuations
Authors: Haefele Michelle A. , Loomis John B.
Published: March 2003

We investigate the effect of panelestimators and sample weighting to improve efficiency of coefficient estimates and confidence intervals on marginal values. Panel estimators are appropriate because most conjoint studies have respondents rate multiple product profiles. Using a random effects ordered probit model increases significance levels on two forest health attribute coefficients and results in substantial tightening of confidence intervals on marginal values. To mitigate the effects of low response rate, we weight the returned surveys using Census data to match the sample to the population. Two of the four marginal values from this weighted ordered probit model are substantially different.
Self‐efficacy and Strategy on Complex Tasks
Authors: Wood Robert , Atkins Paul , Tabernero Carmen
Published: March 2003

The mediational role of strategy in the relationship between self‐efficacy and performance on complex tasks is analysed. Within an individual’s multidimensional self‐efficacy belief system, perceived capabilities for conducting searches in different modalities and for the processing of information, including the use of tools to overcome cognitive limits, are predicted to have differential impacts on the use of judgmental heuristics and biases and the choice of strategies. Search efficacy is predicted to differ across search modalities, such as experimentation, interpersonal questioning, electronic search and passive study, as a function of differences in personal and situational determinants. Processing efficacy is predicted to generalise across a much wider range of cognitive tasks, depending upon perceived similarities in the content of tasks (e.g. verbal versus quantitative) and the tools used. Low search efficacy is predicted to lead to greater use of the availability heuristic, while low processing efficacy is predicted to lead to greater use of the anchoring and adjustment and representativeness heuristics. Choices of specific strategies are predicted from different combinations of weak and strong efficacy beliefs for exploratory search and deliberative processing.
Accountability in a Free‐Market Economy: The British Company Audit, 1886
Authors: Edwards John Richard , Anderson Malcolm , Matthews Derek
Published: March 2003

The relative merits of market forces compared with regulations as the more efficient mechanism for ensuring adequate accountability from business (and non‐business) organizations is a subject of keen debate. Britain in the second half of the nineteenth century is regularly cited as an example of how the market will ensure adequate accountability in the absence of regulatory requirements. There is a great deal of speculation but very little hard evidence concerning the precise levels of accountability during this period. This study is designed to penetrate contemporary attitudes and actions by using primary sources to determine the audit arrangements made by quoted companies in the year 1886. It is discovered that professionally qualified accountants generally, and chartered accountants in particular, had achieved a dominant position by 1886, and possibly rather earlier; a finding which is also used to illuminate the question of the nature of the professional accountants' work in the late nineteenth century.
Data Fixation and the Use of Traditional Versus Activity‐Based Costing Systems
Authors: Briers Michael , Luckett Peter , Chow Chee
Published: March 2003

An important debate in the contemporary accounting literature relates to the relative merits of activity‐based versus volume‐based product costing methodologies. Traditional volume‐based costing systems are said to be flawed and may seriously mislead strategic decision making. Such arguments assume that decision makers use such information in an unproblematic way. This article reports on an experiment designed to investigate whether decision makers are able to overcome data fixation in a setting involving the use of product cost information. In response to criticisms of previous accounting studies of data fixation, subjects received some feedback after each decision, and were rewarded based on performance. The experiment involved subjects making a series of production output decisions based on detailed case information of a hypothetical firm facing different market conditions for each decision. A between‐subjects design was utilized with two cost system treatments: activity‐based costing (ABC) and traditional costing (TC). It was hypothesized that the group provided with ABC cost data would make ‘optimal’ decisions and the group provided with TC cost data would overcome fixation. The results of the experiment indicated that there was, in general, evidence of data fixation among TC subjects, but a small number of subjects did adjust to ABC costs. These results are discussed in the light of previous research and some future directions are outlined.
Business Firms as Adaptive Entities: The Case of the Major Australian Banks 1983–94
Authors: Tabart‐Gay J. , Wolnizer P.W.
Published: March 2003

The conventional accounting notion of ‘going concern’, that a firm will continue business operations in the same manner indefinitely, has influenced accounting thought and practice throughout this century. An alternative view, widely upheld in the literatures of economics and organizational behaviour, is that firms are generally innovative and adapt to changes in market and economic conditions. These conflicting ideas are put under inquiry by examining the business policies and practices of the four major Australian banks over the period 1983 to 1994. We conclude on analytical grounds that conventional cost allocation and deferral practices, being based on the static or conventional idea of a ‘going concern’, are flawed and yield balance sheets that are not indicative of the financial capacity of firms to engage in commerce at any time. We conclude on empirical grounds that the Australian banks, at least, are generally innovative and adaptive enterprises.
An Investigation of Audit Committees' Oversight Responsibilities
Authors: DeZoort F.
Published: March 2003

Audit committee performance has come under close scrutiny in recent years from a variety of policy‐makers, interest groups and researchers. In particular, the adequacy of audit committee oversight has been challenged. At the same time, audit committees are under pressure to increase the scope of their oversight work. This study examines audit committee oversight from the internal perspective of active U.S. audit committee members. A two‐part survey used Wolnizer's (1995) list of seventeen prescribed audit committee objectives related to accounting and reporting, auditors and auditing, and corporate governance in general as a basis to assess audit committee members' abilities to recognize their assigned objectives and explore their perceptions of the key tasks and issues currently addressed by audit committees. The results indicate that audit committee members appreciate the importance of all audit committee members having sufficient expertise in oversight areas related to accounting, auditing and the law. However, some respondents agreed they lacked sufficient expertise in many or all of these areas. In addition, the findings indicate that audit committee members tend not to recognize their assigned responsibilities, but agree with the proposed expansion of committee responsibilities. Using a multimethod approach, internal control evaluation was consistently listed and ranked as the most important oversight responsibility. These findings provide insight into the priority perceived by audit committee members as to their oversight responsibilities, and the adequacy of U.S. reporting disclosures as signals of audit committee work.