bluuebunny/crossref_metadata_2025 huggingface dataset:
Nonlinear Dynamics of Daily Cash Prices
Authors: Yang Seung‐Ryong , Brorsen B. Wade
Published: July 2006

Daily cash price changes are not normally distributed. Their empirical distributions have fat tails and most are skewed. In addition, they are not independent. Among the diffusion‐jump, extended generalized autoregressive conditional heteroskedasticity (GARCH), and deterministic chaos processes, a GARCH process with residuals following a student distribution is the most likely. Our GARCH model reduces leptokurtosis, removes nonlinear dependence, and provides a considerable improvement over the i.i.d. normal model. The GARCH process is not well calibrated because it cannot explain all the observed nonnormality, but it does yield asymptotically valid hypothesis tests.
Macroeconomic Imbalances: A Multiregional General Equilibrium Analysis
Authors: Kraybill David S. , Johnson Thomas G. , Orden David
Published: July 2006

This article analyzes regional and sectoral consequences of recent federal budget and trade deficits. A multiregional computable general equilibrium (MCGE) model is developed in which regions differ in technology, factor endowments, tax rates, government expenditure patterns, and trade relationships. An application to Virginia and the rest‐of‐the‐United States indicates that traditional sectors (agriculture, forestry, basic wood products, mining, textiles, and apparel) bear a greater burden of adjustment to macroeconomic imbalances than do other sectors. The analysis demonstrates that seemingly aspatial national policies may shift the geographic distribution of national output and income.
Reconciling the von Liebig and Differentiable Crop Production Functions
Authors: Berck Peter , Helfand Gloria
Published: July 2006

Two commonly used forms for crop response to inputs are a smooth, differentiable production function and a linear response and plateau (LRP) model. This paper reconciles these two views by showing that smooth functions can be derived by aggregating the effects of heterogenous inputs on LRP functions. Data on corn growth are used to test two specific aggregations.
Factors Influencing the Adoption of Insect Management Technology
Authors: Harper Jayson K. , Rister M. Edward , Mjelde James W. , Drees Bastiaan M. , Way Michael O.
Published: July 2006

Logit analyses are used in evaluating survey data concerning rice stink bug [Oebalus pugnax (Fabricius)] management by Texas rice producers. Effects of rice production attributes on the adoption of insect sweep nets in conjunction with treatment thresholds, and the spraying of insecticides for the management of the rice stink bug, are investigated. The proportion of neighboring land use in pasture, the proportion of rice acreage planted to semidwarf varieties, and producers' attendance at specific field days significantly affect the probability of adopting sweep nets and treatment thresholds. Adoption of sweep nets and treatment thresholds increase the probability of spraying by 11.3%.
Confidence Intervals for Elasticities and Flexibilities: Reevaluating the Ratios of Normals Case
Authors: Dorfman Jeffrey H. , Kling Catherine L. , Sexton Richard J.
Published: July 2006

Many important hypotheses in applied economics depend upon the magnitude of estimated elasticities or flexibilities. However, their statistical properties are unknown for many popular models, making standard statistical inference impossible. This problem is addressed in the present paper which analyzes and evaluates alternative methods of constructing confidence intervals for elasticities and flexibilities. The methods studied include three bootstrap‐based approaches, an approximation based on a Taylor's series expansion, and approaches proposed by Fieller and Scheffé. Results show that all method's except Scheffé's worked reasonably well, but the simpler Fieller and Taylor's series methods modestly outperformed the various bootstrapped‐generated intervals.
Innovation in Structural Change of Local Government
Authors: Otto Daniel M. , Edelman Mark A.
Published: July 2006

An induced innovations framework was used to develop a median voter model to test factors affecting county government's decisions to adopt alternative service delivery methods. Size measures of population and tax base, fiscal measures of tax revenues, the share of tax base in agriculture, and access to human capital were significantly related to structural change of local government.
Technology Adoption and Agricultural Price Policy
Authors: Miller Tracy , Tolley George
Published: July 2006

Market interventions such as price supports or fertilizer subsidies can lead to gains from speeding up adoption of new technologies, but the policies distort resource allocation. A framework is developed for optimizing policies in light of the adoption‐allocation trade off. Based on adoption coefficients and production parameters from third world agriculture, levels and duration of policies are estimated. Sensitivity analyses are performed. Gains are small at best and may be zero or negative in view of farmer costs of adjustment and deadweight losses from taxes.
Food Consumption Changes of Adult Women between 1977 and 1985
Authors: Popkin Barry M. , Guilkey David K. , Haines Pamela S.
Published: July 2006

Nationally representative samples of U.S. women aged nineteen to fifty are used to examine comparable food group consumption data collected in 1977 and 1985. Changes in the proportion of women consuming each food group, quantities consumed by users, and the determinants of consumption changes over time are identified. Significant shifts in consumption of food groups defined by fat and dietary fiber criteria are measured in this research. While standard demographic and socioeconomic factors explain significant amounts of cross‐section food group consumption variation, the effects of these factors vary considerably between 1977 and 1985 and explain most of the food group consumption trends.
The Welfare Effects of Targeted Export Subsidies: A General Equilibrium Approach
Authors: Bohman Mary , Carter Colin A. , Dorfman Jeffrey H.
Published: July 2006

A three‐country model of export subsidies is developed with an exporter, an importer, and a neutral country which can act on either side of the market. When the neutral country is an exporter, the country offering a targeted export subsidy always suffers a welfare loss. However, when the neutral country is an importer, the possibility of a paradoxical result—that the subsidizing country can gain and the subsidized country can lose—is shown to exist, and the conditions under which this result occurs are derived. The model fails to provide justification (on national welfare grounds) for widespread use of targeted export subsidies such as the export enhancement program.
A Bayesian Approach to Explaining Sequential Adoption of Components of a Technological Package
Authors: Leathers Howard D. , Smale Melinda
Published: July 2006

Agricultural innovations are often promoted as a package—a new seed variety, a recommended fertilizer application, and other recommended cultivation practices. Nevertheless, many farmers adopt pieces of the package rather than the whole, in a sequential fashion. This paper presents a behavioral model which explains sequential adoption as a consequence of learning by adopting farmers. In order to learn more about the entire technological package, the farmer may adopt a part of the package. The model is shown to be consistent with observed patterns of sequential adoption.
Interactions between Agricultural and Resource Policy: The Importance of Attitudes toward Risk
Authors: Leathers Howard D. , Quiggin John C.
Published: July 2006

Using a method proposed by Meyer for deriving comparative statics results in the presence of risk, this paper analyzes the effects of various agricultural and environmental policy alternatives on the choices of a risk‐averse producer with a Just and Pope production function. Many commonly held beliefs about policy effects are not supported unambiguously by economic theory. For example, a tax on pesticides will not necessarily reduce pesticide use or average output, and a reduction in price of agricultural output will not necessarily lead to a reduction in use of water or agricultural chemicals.
Joint Risk Preference‐Technology Estimation with a Primal System
Authors: Love H. Alan , Buccola Steven T.
Published: July 2006

Applied studies of the firm in a risky environment have concentrated either on the firm's technology or on its risk preferences. These models result in generally inconsistent and inefficient parameter estimates. A primal model is proposed which allows a firm's preferences and technology to be estimated jointly in the presence of risk. The model is applied to Iowa corn production and estimated technology parameters are compared with those from other approaches. Modest risk aversion leads to inelastic (even backbending) per‐acre supplies and input demands. Yield heteroskedasticity in inputs leads to supply heteroskedasticity in prices, especially for risk‐neutral firms.
Using Count Data Models in Travel Cost Analysis with Aggregate Data
Authors: Hellerstein Daniel M.
Published: July 2006

In order to control for censoring and the integer nature of trip demand, the use of count data models in travel cost analysis is attractive. Two such models, the Poisson and negative binomial, are discussed. Robust estimation techniques that loosen potentially stringent distributional assumptions are also reviewed. For illustrative purposes, several count data models are used to estimate a county‐level travel cost model using permit data from the Boundary Waters Canoe Area.
The Aggregate Effects of Risk in Agricultural Sector
Authors: Meyer Jack , Robison Lindon J.
Published: July 2006

The theory of the firm facing a random output price is extended to include industry equilibrium conditions in a way particularly important for agriculture. Land prices adjust to maintain industry equilibrium. The comparative statics and the effects of policy for the firm are significantly altered. The main finding is that risk and other parameter changes are capitalized into the price of land and yield wealth or income effects rather than substitution effects. This often simplifies the analysis.
Dietary Effects of the Food Stamp Program
Authors: Devaney Barbara , Moffitt Robert
Published: July 2006

Based on data from the 1979–80 Survey of Food Consumption in Low‐Income Households, this paper estimates the effects of changes in cash income and the food stamp benefit on household nutrient availability, while controlling for two potential sources of selection bias. The major finding of the empirical analysis is that the estimated dietary effects of changes in food stamp benefits are considerably larger than those resulting from changes in cash income, with estimates of the ratios of the MPC for the food stamp benefit to the cash‐income MPC ranging from three to seven across nutrients. No significant evidence of selection bias was found, and the estimated dietary effects of food stamp benefits from the selection bias models are similar to those from the basic model estimated by ordinary least squares regression.
Water Markets and Water Quality
Authors: Weinberg Marca , Kling Catherine L. , Wilen James E.
Published: July 2006

In addition to improving the allocative efficiency of water use, water markets may reduce irrigation‐related water quality problems. This potential benefit is examined with a nonlinear programming model developed to simulate agricultural decision‐making in a drainage problem area in California's San Joaquin Valley. Results indicate that a 30% drainage goal is achievable through improvements in irrigation practices and changes in cropping patterns induced by a water market. Although water markets will not generally achieve a least‐cost solution, they may be a practical alternative to economically efficient, but informationally intensive, environmental policies such as Pigouvian taxes.
Testing for Misspecification in the Referendum Contingent Valuation Approach
Authors: Ozuna Teofilo , Jang Kee Yoon , Stoll John R.
Published: July 2006

Binary choice models are frequently used in the analysis of referendum contingent valuation data. Because omitted regressors, heteroskedasticity, and distribution asymmetry in these models result in inconsistent parameter estimates, it is important that misspecification tests be undertaken. In this article, conditional moment tests for these problems are presented and applied to data from two referendum contingent valuation studies. Results show that some models have misspecification problems and that these problems affect the estimation of welfare measures.
Defensive Technology and Welfare Analysis of Environmental Quality Change with Uncertain Consumer Health Impacts
Authors: Lee Linda K. , Moffitt L. Joe
Published: July 2006

Measuring the ex post losses from environmental quality change is an important issue when environmental contamination creates health risks, liability is assigned, and private compensation efforts are required. This paper proposes a methodology for measuring the ex post welfare impact of environmental quality change using market behavior from defensive expenditures. Conditions under which a defensive technology can provide a bound on welfare estimates are identified.
Welfare Implications of Equilibrium Supply and Demand Curves in an Open Economy
Authors: Bullock David S.
Published: July 2006

Line integral theory is used to prove that in a closed economy the net domestic social welfare effects of a market distortion can be captured in the distorted market alone by using equilibrium supply and demand curves. Considerable confusion exists in the applied literature about the proper application of this proposition. It is shown that the proposition does not generally hold for open economies. It is shown that in general neither geometric areas behind equilibrium supply curves nor geometric areas behind equilibrium demand curves have any welfare significance.
Market Structure for Farmed Salmon
Authors: DeVoretz Don J. , Salvanes Kjell G.
Published: July 2006

Farmed salmon represents 20% of the total volume of the world's salmon supply. Norwegian salmon farmers produce more than 50% of the world's farmed salmon. Rapid expansion of this industry raises important issues about market model specification. We specify and test models with varying degrees of market power, including third‐degree price discrimination, using Norwegian export data from 1983 to 1988. Results indicate that Norwegian exporters have limited ability to engage in regional price discrimination, although they may have discriminated after the third quarter of 1987. Seasonal price discrimination, however, may have taken place because demand is more inelastic in periods when fresh wild‐caught salmon are unavailable.
Damage Control Econometrics: Functional Specification and Pesticide Productivity
Authors: Carrasco‐Tauber Catalina , Moffitt L. Joe
Published: July 2006

Empirical studies of pesticide productivity have often concluded that the value of marginal product of pesticide exceeds marginal factor cost despite anecdotal and other evidence to the contrary. This article presents estimates of pesticide productivity derived from alternative functional specifications of pesticide involvement in production. Results suggest that explanation of the magnitude of pesticide productivity estimates obtained in empirical studies may lie somewhere other than with functional specification.
Adoption Ceilings and Modern Coarse Cereal Cultivars in India
Authors: Jansen Hans G. P. , Walker Thomas S. , Barker Randolph
Published: July 2006

The concept of, and evidence for, regional adoption ceilings is assessed for modern coarse cereal cultivars in India. Adoption is defined as the proportion of total area of a given coarse cereal planted to modern cultivars. Agroclimatic and soil differences are more important than disparities in infrastructure in explaining the variation across regions in estimated adoption ceilings. Qualitatively different modern cultivars from those now released are necessary to change regional adoption behavior. The results support an agricultural research strategy that gives higher priority to more regionally oriented breeding and testing programs in preference to the past emphasis on wide adaptation.
Utilization, Profitability, and the Adoption of Animal Draft Power in West Africa
Authors: Jaeger William K. , Matlon Peter J.
Published: July 2006

Farmers in West Africa's semi‐arid tropics have been slow to adopt animal draft power to replace manual cultivation, defying the logic of conventional choice‐of‐technique analyses. This paper demonstrates that farmers can profitably adopt animal draft power when household characteristics and exogenous factors permit high utilization of animals and equipment. Empirical analysis of farm‐level data indicates that low utilization is the key cause of low returns, and that a long learning period precedes achieving high utilization and benefits. Linear programming models are used to establish the importance of family size, access to land, and appropriate implements in achieving profitable adoption.
On the Political Economy of Public Good Inputs in Agriculture
Authors: de Gorter Harry , Zilberman David
Published: July 2006

The paper analyzes two elements in explaining and prescribing the level of cost‐reducing “public good” inputs in agriculture: the distribution of political influence and the economic properties of markets. The incidence of costs/benefits of alternative cost‐sharing arrangements between taxpayers and producers is compared to the social optimal and competitive outcomes. Although one group could lose, we focus only on situations of a Pareto improvement. The model predicts why some sectors have relatively more public versus private research funding and why the degree of underinvestment varies across sectors. The observed underinvestment in agriculture may be due to the political power of farmers, inelastic demand, and highly productive public good inputs.
Risk Aversion and Price Risk in Duality Models of Production: A Linear Mean‐Variance Approach
Authors: Coyle Barry T.
Published: July 2006

A duality model of production is developed that permits risk aversion and price uncertainty. The linear mean‐variance framework employed is tractable for empirical research, in contrast to duality models of risk based on a generalized expected utility function. The framework is more general than in standard price certainty models while retaining the simplicity needed for empirical research.
Incorporating Data and Theory in Roundwood Supply and Demand Estimation
Authors: Hetemäki Lauri , Jari Kuuluvainen
Published: July 2006

This paper examines the aggregate pulpwood market in Finland using the econometric approach advocated by Hendry, Neale, and Joba and Spanos, who propose a statistically consistent way to estimate simultaneous‐equations models. Private nonindustrial timber supply is estimated along with a three‐input demand function (capital, labor, and wood). Results indicate that short‐term supply reacts positively to an increase in stumpage price, while the long‐term (total) elasticity is negative and small in absolute terms. Capital is a complement while labor is a substitute for roundwood input. Dynamic adjustment process, substitution and cross‐price effects, and capital market imperfections implied by the present study differ from those obtained in previous research.
The von Liebig Hypothesis
Authors: Paris Quirino
Published: July 2006

Using a celebrated sample of corn response to nitrogen and phosphorus collected by Heady and Pesek, it is shown that a von Liebig model with Mitscherlich regimes is the best interpreter of the experimental data. This assertion is based upon the results of nonnested hypothesis tests among five alternatives. An extension of the test to switching regression models reinforces the superiority of the von Liebig hypothesis for this sample. Cost functions, dual to von Liebig production functions, have continuous derivatives with respect to the parameters and may be easier to estimate when input prices are available.
Estimating the Technology Coefficients in Linear Programming Models
Authors: Dixon Bruce L. , Hornbaker Robert H.
Published: July 2006

Estimation of a linear programming model's technology coefficients using data from a sample of firms is viewed as an application of random coefficient regression (RCR). An RCR estimator restricting predicted coefficient values to be nonnegative is proposed. The estimator's finite sample performance is examined in Monte Carlo experiments. The proposed estimator performs well compared with inequality‐restricted least squares, despite its use of an estimated covariance matrix. In sampling a population of firms, a dependency may arise between coefficients and activity levels. Two tests for dependence are proposed and examined in Monte Carlo experiments. The tests' reliability varies with characteristics of the sampled population.
Assessing Technical Efficiency in Commercial Fisheries: The Mid‐Atlantic Sea Scallop Fishery
Authors: Kirkley James E. , Squires Dale , Strand Ivar E.
Published: July 2006

Despite the extensive effort to research issues of allocative efficiency in fisheries, little empirical analysis of technical efficiency (TE) in fisheries exists. This study examines vessel efficiency using a stochastic production frontier based on a sample of sea scallop vessels operating in the Mid‐Atlantic between 1987 and 1990. Estimates of TE are computed and compared with input usage, resource conditions, economic performance, and recently imposed regulations. The analysis suggests that owners and captains only partially compensate for changes in resource conditions through the use of labor and fishing effort, and recent regulations may improve overall TE in the short run.
Rural Population Decline in the 1980s: Impacts of Farm Structure and Federal Farm Programs
Authors: Goetz Stephan J. , Debertin David L.
Published: July 2006

Federal farm program benefits accrue disproportionately to large‐scale farm operators, and continue largely because of the political influence of their beneficiaries. Some writers argue that these payments stem the movement of labor out of agriculture, ultimately reducing the pace of rural depopulation. Here, a theoretical model linking farm program payments to population loss is presented and empirically estimated for the years 1980–90. Larger farm program payments as a share of total cash marketing receipts were associated with greater population losses from rural counties. This result holds after controlling for other economic variables affecting population migration from rural areas.
Government Rail Car Regulation and the Price of Canola
Authors: Carter Colin A.
Published: July 2006

In this paper I analyze Canadian government regulation of rail transportation as it affects the domestic price of canola in both the street and futures market. The regulation gives rise to an idiosyncrasy: Vancouver canola futures and Vancouver spot prices do not converge, with futures trading at a significant premium to spot prices during the delivery month. As a result, Vancouver futures prices do not reflect international market conditions. I offer an explanation of the futures premium. In addition, I find that there is evidence to support a contention that a change in rail car policy in 1989 improved canola throughput efficiency in Vancouver and may have led to higher street prices.
Improving Shadow Price Information: Obtaining Relevant Shadow Prices from Problems with Decomposable Objectives
Authors: McCarl Bruce A. , Rister M. Edward , Ziari Houshmand , Stokes Jeffrey R.
Published: July 2006

Mathematical programming models can incorporate multiple objectives. Shadow prices in such models reflect a mixture of all of the objectives. A procedure is implemented to develop decomposed shadow prices applicable to the individual objectives. The procedure is demonstrated in a GAMS implementation for multiple objective and risk‐related models.
The Problem of the Persistent Hog Price Cycle: A Chaotic Solution
Authors: Streips Marcus A.
Published: July 2006

A persistent hog‐corn price ratio has been known to exist since the early 1930s and many attempts have been made since then to model its dynamics. That these models have been ineffectual as forecasting tools is apparent by the fact that the hog cycle has persisted to this day. In this paper I propose that increased forecasting accuracy can be obtained by adjusting traditional forecasting models so that they account for deterministic, nonlinear processes. With improved forecasts, the costs of countercyclical production will decrease, dampening and perhaps even eliminating the cycle. The chaotic dynamics of the hog‐corn price cycle is confirmed, and chaotic models of this system are developed. The analysis provides the framework for developing a function to forecast the dynamics of the hog‐corn price ratio.
Identifying Buyer Market Areas and the Impact of Buyer Concentration in Feeder Cattle Markets Using Mapping and Spatial Statistics
Authors: Bailey DeeVon , Brorsen B. Wade , Thomsen Michael R.
Published: July 2006

The size and shape of market areas for buyers from four major cattle feeding areas are determined by mapping data from the nation's largest video auction. Spatial statistics are also examined to determine their ability to identify market areas for feeder cattle. Mapping shows that procurement areas for feeder cattle buyers are large, irregularly shaped, and overlap substantially. A new statistic was developed to determine primary market areas. Feeder cattle buyers behave as oligopsonists in counties where most buyers are from one feeding area, and prices are higher for feeder cattle in counties where two or more market areas overlap.
Temporal and Spatial Aggregation: Alternative Marketing Margin Models
Authors: Lyon Charles C. , Thompson Gary D.
Published: July 2006

The effects of temporal and spatial data aggregation on the performance of alternative marketing margin models is assessed using monthly, quarterly, and semiannual fluid milk prices from three U.S. cities. Nonnested tests for multivariate and single equation models with serial correlation are used to choose among alternative models at each aggregation level. While model choice is affected by temporal and spatial aggregation, model choice becomes more difficult as data are temporally or spatially aggregated.
A Repeated Nested‐Logit Model of Atlantic Salmon Fishing
Authors: Morey Edward R. , Rowe Robert D. , Watson Michael
Published: July 2006

Participation and site choice for Atlantic salmon fishing are modeled in the context of a repeated three‐level nested‐logit model. Consumer's surplus measures are derived for different levels of species availability in the Penobscot River, the most important salmon river in New England. For comparison, six other travel‐cost models are estimated. These include restrictive cases of the nested‐logit model, a partial demand model, and two single‐site demand models. Comparisons across these models indicate the importance of modeling the participation decision, including income effects, and of adopting a nested‐logit structure rather than a single‐level logit structure.
A Comparison of Contingent Preference Models
Authors: Mackenzie John
Published: July 2006

I compare the informational efficiencies of contingent rating, contingent ranking, and two contingent paired‐comparison methods as alternatives to the referendum contingent valuation method. The contingent rating method is hypothesized to be most efficient because ratings convey information on preference intensities and can uniquely represent respondent indifference or ambivalence. Survey data on hunters' ratings of alternative hypothetical hunting trips are used to estimate four alternative indirect utility models from which marginal willingness‐to‐pay measures for individual trip attributes are derived. Model comparison, WTP estimates, and their confidence intervals confirm the relative efficiency of the contingent rating approach.
The Impact of Technical Change, Scale Effects, and Forward Ordering on U.S. Fiber Demands
Authors: Shui Shangnan , Beghin John C. , Wohlgenant Michael
Published: July 2006

This paper estimates a complete system of input cost shares in U.S. textile production, using time‐series data and a linear logit specification incorporating the impact of technical change and scale effects on derived demands for natural and manmade fibers. The specification accounts for forward ordering dynamics in the textile industry. Technical change has decreased natural fiber use in U.S. textile mills in favor of manmade fibers. Decomposition analysis of economic factors affecting long‐run use of natural versus manmade fiber indicates that nonprice factors account for 70% of the decline in long‐run natural fiber use.
A Dynamic Model of Acreage Allocation with General and Crop‐Specific Soil Capital
Authors: Orazem Peter F. , Miranowski John A.
Published: July 2006

We develop an empirically tractable model of acreage allocation decisions in which farmers consider impacts of current crop production 00 future soil productivity. Because of the soil productivity effects, future crop prices are shown to affect current acreage allocations. Government programs which alter farmers' expectations of future crop prices relative to current prices also alter farmers' consideration of soil productivity effects of current acreage allocations. Reduced form and structural versions of our model are shown to yield reasonable parameter estimates.
Preferences for Pesticide Regulation
Authors: Horowitz John
Published: July 2006

I look at consumer preferences for pesticide regulation. The analysis is based on a random telephone survey of households. There is a distinct preference for pesticide regulation over an alternative risk reduction proposal (auto exhaust regulation) when both regulations are hypothesized to cost the same and save the same number of lives. Such preference has a surprisingly broad demographic base. However, when the potential numbers of lives saved are different under the two programs, almost 71% of the subjects preferred the regulation that saved the most lives regardless of the risk source.
Land Allocation in HYV Adoption Models: An Investigation of Alternative Explanations
Authors: Smale Melinda , Just Richard E. , Leathers Howard D.
Published: July 2006

Microeconomic theory provides four competing explanations for partial land allocation to new and traditional seed varieties in HYV adoption decisions: input fixity, portfolio selection, safety‐first behavior, and learning. Testing a general model that contains each as a special case suggests that they are jointly most likely to explain land allocation in the HYV adoption decisions of Malawian smallholders. Yet when each explanation is tested to the exclusion of the others (as is usually the case in the literature), competing hypotheses are individually significant. Results suggest that employing approaches based on single explanations may lead to inappropriately narrow conclusions.
A Public Choice Perspective on Agricultural Policy Reform: Implications of the New Zealand Experience
Authors: Scrimgeour F.G. , Pasour E.C.
Published: July 2006

A public choice framework is used to interpret and explore the implications of the dramatic New Zealand economic reforms initiated in 1984. The New Zealand deregulation experience holds lessons for other countries attempting to limit rent seeking and rationalize farm policies. Economic analyses of protectionist policies helped to change public opinion, an important precursor to policy reform. The reform of farm policies was made easier because other sectors were simultaneously restructured. The New Zealand deregulation experience emphasizes the importance of the institutional framework for real world political processes and suggests that constitutional issues warrant more attention in public policy analysis.
Multiple Policy Goals in a Trade Model with Explicit Factor Markets
Authors: Gunter Lewell F. , Jeong Ki Hong , White Fred C.
Published: July 2006

As trade protectionism has been reduced through multilateral agreements, concerns have been raised about competitiveness effects of cross‐country differences in environmental and labor standards. Costs associated with decreased competitiveness are distributed across consumers and the various providers of inputs used in the production of affected commodities. In this paper we present a trade model which can be used to help quantify the magnitude and distribution of costs associated with changes in input regulations. The model can also be used to identify levels of policies required to offset or redistribute costs associated with regulations which reduce international competitiveness.
Quotas without Supply Control: Effects of Dairy Quota Policy in California
Authors: Sumner Daniel A. , Wolf Christopher A.
Published: July 2006

Unlike the federal milk marketing order system, California's system includes a milk quota program. Oddly, this quota restricts neither production nor marketing. In aggregate, the quota program leads to more milk production than a typical marketing quota, but less milk than blend pricing without the quota. The California program generates more producer surplus and smaller welfare losses than a federal‐style program without quota. When class 1 milk sales expand, production expands less under the quota program than with blend pricing without a quota. Finally, increases in aggregate quota lower production because they lower the marginal price of milk facing producers.
Monte Carlo Analysis of Mean Reversion in Commodity Futures Prices
Authors: Irwin Scott H. , Zulauf Carl R. , Jackson Thomas E.
Published: July 2006

This study examines whether mean reversion is present in corn, soybean, wheat, live hog, and live cattle futures prices. Consistent with earlier studies, asymptotic regression results provide substantial evidence of mean reversion in commodity futures price movements. In sharp contrast, the Monte Carlo regression analysis does not provide support for the existence of mean reversion in commodity futures prices. A clear implication is that the asymptotic regression results are misleading. The reason is that the small sample distributions of test statistics are not well approximated by assumed asymptotic distributions.
Funding, Structure, and Management of Public Agricultural Research in the United States
Authors: Huffman Wallace E. , Just Richard E.
Published: July 2006

Hypotheses about state agricultural experiment stations are investigated. Formula funding is found more productive than competitive‐grant funding, possibly owing to transactions costs of reviewing and misallocations of pork barrel funding. Heavier administrator involvement in problem choice is found to enhance productivity of applied research where approach and product can be well‐specified in advance, but detracts from productivity of pretechnology research where response to individual incentives may lead to more timely adaptations. Stronger vertical integration of pretechnology, applied sciences, and extension activities is found to increase productivity, suggesting the importance of strongly science‐based applied research and practical understanding of pretechnology sciences.
Multicrop Production Decisions in Western Irrigated Agriculture: The Role of Water Price
Authors: Moore Michael R. , Gollehon Noel R. , Carey Marc B.
Published: July 2006

Applying a model of the multioutput firm, econometric results are reported for irrigated production in four multistate regions of the American West. Cross‐sectional microdata from the Farm and Ranch Irrigation Survey and limited‐dependent variable methods are used to estimate crop‐choice, supply, land allocation, and water demand functions for field crops. Farm‐level water demand is decomposed into the sum of crop‐level water demands, and crop‐level demands are further separated into an extensive margin (land allocations) and intensive margin (short‐run water use). Response to water price (measured as groundwater pumping cost) occurs primarily at the extensive margin.
Human Capital, Producer Education Programs, and the Adoption of Forward‐Pricing Methods
Authors: Goodwin Barry K. , Schroeder Ted C.
Published: July 2006

Using a sample of 509 Kansas producers, we evaluate factors affecting adoption of forward pricing methods. We focus on producers' human capital accumulation and its effect on adoption of forward‐pricing techniques. Probit models are employed to evaluate producers' participation in educational programs and their forward‐pricing adoption decisions. Tobit models are employed to evaluate individual levels of adoption of these techniques in the marketing of wheat, corn, grain sorghum, soybeans, and cattle.
Nutrient Elasticities in a Complete Food Demand System
Authors: Huang Kuo S.
Published: July 2006

This study explores the linkage of the determinants of food choice with consumer nutrient availability by developing a procedure to measure changes in nutrient availability as the demand for food items change. It uses demand elasticities from traditional demand analysis to estimate elasticities of changes in the nutritional content of consumer diets. The procedure is applied to estimate nutrient elasticities for fifteen nutrients in response to changes in thirty‐five food prices and per capita income.
Count Data Models and the Problem of Zeros in Recreation Demand Analysis
Authors: Haab Timothy C. , McConnell Kenneth E.
Published: July 2006

In this paper we develop a count data model for consumer demand which explicitly allows for a large number of zero observations for the dependent variable, and separation of the participation versus quantity decisions. The advantages of the model over traditional censored and count demand models are brought out, and the appropriate consumer surplus measures are derived. By introducing a random error term into the traditional count model demand function, the appropriate measure of expected consumer surplus for count models is derived. The model is illustrated using a recreational survey of the general population.
Hedging with Commodity Options When Price Distributions are Skewed
Authors: Vercammen James
Published: July 2006

Lapan, Moschini, and Hanson have demonstrated that commodity options can be useful for hedgers who face a symmetric price distribution and who wish to maintain a net open market position. This is because options skew the distribution of profits to the right and such skewness typically increases expected utility. In this paper I use standard comparative statics to show that options are relatively more valuable for reducing the skewness of a nonsymmetric price distribution. Depending on the direction of the skewness and the underlying price expectations, hedgers may write options as well as purchase them.
Valuing Food Safety in Experimental Auction Markets
Authors: Hayes Dermot J. , Shogren Jason F. , Shin Seung Youll , Kliebenstein James B.
Published: July 2006

In this paper, we value food safety in a nonhypothetical setting—experimental auction markets. First, subjects underestimate the relatively low probabilities of food‐borne illness. Second, measures of value are within a relatively flat range across a wide range of risks, even with repeated market experience and full information on the objective probability and severity of illness, suggesting subjects rely on prior perceptions. Third, marginal willingness to pay decreases as risk increases, suggesting that the perceived quality of new information can affect the weight the individuals place on the information. Finally, pathogen‐specific values seem to act as surrogates for general food safety preferences.
Optimal Hedge Ratios with Risk‐Neutral Producers and Nonlinear Borrowing Costs
Authors: Brorsen B. Wade
Published: July 2006

A new theory of hedging is derived assuming producers are risk neutral, forward pricing is costly, and borrowing costs are nonlinear. The standard risk‐minimizing hedge ratio is derived when forward pricing is costless. When the assumption of costless hedging is dropped, high‐leveraged firms are shown to hedge more than do low‐leveraged firms. If the value of capital is uncorrelated with output price, firms are shown to hedge more as cash price variability increases. Thus, the model can be consistent with what firms actually do.
Catholic High Schools and Rural Academic Achievement
Authors: Sander William
Published: July 2006

In this paper the effects of rural Catholic high schools on achievement in mathematics, high school graduation rates, and the likelihood that high school graduates go on to college are examined. Estimates that are corrected for selection bias indicate that rural Catholic high schools have a positive effect on mathematics test scores and no effect on graduation rates or on the odds of going on to college. Data from the High School and Beyond 1980 Sophomore Cohort Third Follow‐Up (1986) are used.
Damage Control Productivity: Why Econometrics Matters
Authors: Carpentier Alain , Weaver Robert D.
Published: July 2006

For nonexperimental data, asymmetric specifications of the role of damage control inputs impose restrictions of homotheticity or nonjointness on the underlying technology. A generalized symmetric form where damage control inputs affect factor diminution functions motivates use of symmetric specifications. Panel data and estimation methods are presented to produce robust estimates of damage control productivity that are free of heterogeneity bias. Estimates of the productivity of pesticides for French cereal farm production illustrate that fixed firm and time effects are important. Estimates indicate substantially smaller marginal productivity of pesticides than reported by past studies.
Working Wives and Food away from Home: The Box‐Cox Double Hurdle Model
Authors: Yen Steven T.
Published: July 2006

Household expenditures on food away from home are analyzed with the use of the BLS' 1989 Consumer Expenditure Survey. Parameterization and distributional assumptions of Cragg's double‐hurdle model are generalized for this purpose, and the resulting model outperforms the more traditional ones. Results suggest households with working wives and those with higher income are more likely to consume food away from home and also to consume more than others. Wife's age and household size increase the conditional level of consumption. Education has conflicting effects on probability and conditional level of consumption.
The Choice of a Welfare Measure under Uncertainty
Authors: Ready Richard C.
Published: July 2006

Use of option price as a welfare measure when conducting a benefit‐cost analysis under uncertainty is appropriate only if the project under consideration will have no impact on the allocation of risk among individuals. Use of the willingness‐to‐pay locus as a benefit measure is appropriate only if the project will result in an efficient allocation of risk. A more general welfare measure is proposed, maximum agreeable payment, that correctly measures the benefits and costs of any project.
Multimarket Exploitation: The Case of Biotechnology and Chemicals
Authors: Just Richard E. , Hueth Darrell L.
Published: July 2006

Biotechnology enables rapid development of products with specific characteristics. We show that those who control the direction of biotechnology development influence the resulting industry structure. Through multimarket exploitation, chemical companies develop biotechnology that increases dependence on chemicals, whereas nonchemical companies tend toward development of biotechnology that substitutes for chemicals. Chemical companies tend to both underinvest and underproduce. Conversely, firms without vested chemical interests tend to overinvest and overproduce—even with monopoly‐enabling patents. Results show how the consequent industry structure can be affected by choice of agricultural policy.
Point/Nonpoint Source Trading of Pollution Abatement: Choosing the Right Trading Ratio
Authors: Malik Arun S. , Letson David , Crutchfield Stephen R.
Published: July 2006

In programs for trading pollution abatement between point and nonpoint sources, the trading ratio specifies the rate at which nonpoint source abatement can be substituted for point source abatement. The appropriate value of this ratio is unclear because of qualitative differences between the two classes of sources. To identify the optimal trading ratio, we develop and analyze a model of point/nonpoint trading. We find the optimal trading ratio depends on the relative costs of enforcing point versus nonpoint reductions and on the uncertainty associated with nonpoint loadings. The uncertainty does not imply a lower bound for the optimal trading ratio.
Producer Price Risk and Quality Measurement
Authors: Hueth Brent , Ligon Ethan
Published: July 2006

Risk‐averse farmers in the produce industry grow a product whose market price is often quite unpredictable. Shippers or other intermediaries shield the farmer from much of this price risk; however, actual contracts between growers and shippers vary considerably across commodities in the residual price risk growers face. We hypothesize that imperfect quality measurement results in a moral hazard problem, and that price provides additional information regarding quality. As a consequence, an efficient contract does not shield growers from all idiosyncratic price risk. We examine this hypothesis for the case of fresh‐market tomatoes.
The Pricing of Revenue Assurance
Authors: Stokes Jeffrey R. , Nayda William I. , English Burton C.
Published: July 2006

A theoretical model to value gross revenue assurance under one of the popular proposals facing U.S. policy makers is developed. The approach makes use of a fundamental paradigm of asset valuation and stochastic calculus. Because farm‐level gross revenue is not a traded asset, equilibrium arguments must be made to specify the partial differential equation characterizing the value of the assurance. An example solution is presented under the assumption of lognormally distributed gross revenue. County‐level data for a variety of crops are used to examine empirically the pricing ability of the model.
Toward a Positive Economic Theory of Hedging
Authors: Collins Robert A.
Published: July 2006

The hedging models developed over the last half century are evaluated for their ability to explain the actual hedging behavior of the various economic agents. This evaluation shows a total lack of a reasonable positive model of hedging behavior. While each class of existing models predicts some observed behavior, none is able to predict the broad range of actions that is easily observed in the real world. In this paper I develop such a model and include a plausible and coldly rational economic explanation for why farmers don't hedge at all while merchandisers with identical risk attitudes will fully hedge.
Optimal Capacity in the Anhydrous Ammonia Industry
Authors: Stiegert Kyle W. , Hertel Thomas W.
Published: July 2006

This study analyzed the status of manufacturing capacity in the U.S. anhydrous ammonia industry (1971–91). Pindyck's (1988) real option model was extended to account for mean‐reverting tendencies in the marketing margin to determine optimal capacity for each year. The key result of the study is that the 30% expansion in 1973–74 would not have been recommended by the real option model, while traditional discounted cash flow approaches available in the 1970s could have easily rationalized the choices made by the industry. The results underscore the potential gains in predictive power from using the real option model in analyzing large, irreversible investments.