2001 Annual meeting, August 5-8, Chicago, IL, 2001
This study develops an empirical framework that can be used to estimate quality-adjusted price el... more This study develops an empirical framework that can be used to estimate quality-adjusted price elasticities from cross-sectional data, which are theoretically consistent and comparable to elasticities from time-series data. The new approach shows the importance of properly adjusting for quality variation in demand analysis. Estimating elasticities of consumer demand has been an important research issue in agricultural economics. These estimates are used to understand the behavior of consumers and to establish firm or industry-level marketing strategies and appropriate agricultural policies at the government level. Past studies have generally estimated these elasticities using inter-temporal price information from time-series data. Recently, however, there have been discussions in the literature on estimating demand elasticities from cross-sectional data as this type of data becomes increasingly available from either traditional survey or electronic scan. Important questions often posed in the literature include: can we estimate price elasticities from cross-sectional data?; if so, what is the theoretical background we should base on and what procedures should we establish to make these elasticities comparable to those from time-series data? The objective of this study is to develop an empirical framework that can be used to estimate price elasticities in cross-sectional demand analysis, which are theoretically consistent and comparable to elasticities from time-series data. Traditionally, the demand analysis with cross-sectional data assumed that all households or individuals face the same prices. In early 1950s, Prais and Houthakker argued that the price variation could exist in the cross-sectional data due to various reasons such as region, price discrimination, services purchased with the commodity, seasonal effects, and quality effects. Since then, there has been a general consensus in the literature that of these factors, price variation from regional and seasonal differences is desirable for demand analysis (e.g., Cox and Wohlgenant; Friedman; and Deaton). In particular, Friedman suggests that constructing a demand curve from spatial data is essentially similar to that from time-series data when conditions of supply vary considerably while conditions of demand vary little, which is possible for products that have distinctive local markets with
The Institute's mission is to enhance the overall understanding o f economic and policy issues as... more The Institute's mission is to enhance the overall understanding o f economic and policy issues associated with commodity promotion programs. An understanding o f these issues is crucial to ensuring continued authorization for domestic checkoff programs and to fund export promotion programs. The Institute supports specific research projects and facilitates collaboration among administrators and researchers in government, universities, and commodity promotion organiza tions. Through its sponsored research and compilations o f related research reports, the Institute serves as a centralized source o f knowledge and information about commodity promotion eco nomics.
The Institute's mission is to enhance the overall understanding of economic and policy issues ass... more The Institute's mission is to enhance the overall understanding of economic and policy issues associated with commodity promotion programs. An understanding of these issues is crucial to ensuring continued authorization for domestic checkoff programs and to fund export promotion programs. The Institute supports specific research projects and facilitates collaboration among administrators and researchers in government, universities, and commodity promotion organizations. Through its sponsored research and compilations of related research reports, the Institute serves as a centralized source of knowledge and information about commodity promotion economics.
In this study, we examine the distributional effects of research versus consumer promotion. A few... more In this study, we examine the distributional effects of research versus consumer promotion. A few years ago, a notable article by Wohlgenant (AlAE 75, 1993) investigated this issue and concluded that producers would benefit more from research on farm-level production than from research on marketing services and promotion. His findings have drawn important policy implications for the allocation of checkoff funds, especially for those producer groups (e.g., dairy, beef, and pork) who spend a large share of their funds on consumer promotion. We challenge his conclusions. We contend that his findings are confined to a special case, the parallel shift in demand and supply. To verify our claim, we reexamined his findings with an alternative case, a pivotal shift, and found that consumer promotions benefitted producers more than research activities. Our new findings indicate that the relative profitability of research versus promotion is highly sensitive to the assumption of the nature of shifts in demand and supply.
Implications of the 2006 E. coli outbreak on spatial price transmission in the U.S. fresh spinach market
Agribusiness, Feb 25, 2017
A regime switching error correction model is applied to weekly shipping point and terminal market... more A regime switching error correction model is applied to weekly shipping point and terminal market spinach prices in order to assess the spatial price transmission impact of the 2006 E. coli outbreak on the U.S. fresh spinach market. A food safety index (FSI) related to the outbreak is calculated and used as the regime switching mechanism for 11 alternative farm‐to‐wholesale spatially separated market pairs. Results suggest not all markets responded uniformly to the FSI. The majority of the markets with alternative sources of spinach exhibited nonlinearities, whereas those which were primarily supplied by California producers did not. In general, shorter adjustment speeds were seen in terminal markets that were closer in proximity to the California shipping point. Southern market pairs exhibiting threshold behavior saw increased efficiency after the outbreak (potentially due to increased self‐regulation), whereas the remaining pairs saw a loss in efficiency. [EconLit citations: C32, Q11].
Modelling upstream and downstream market power in bilateral oligopoly
Applied Economics, Aug 27, 2016
ABSTRACT This article develops a general model that estimates market power exertion in a bilatera... more ABSTRACT This article develops a general model that estimates market power exertion in a bilateral market relationship for processors and retailers where each may also have market power in their primary input market and output markets, respectively. Monte Carlo experiments are used to generate industry data for market structures such as perfect competition, monopoly, monopsony, bilateral imperfect competition with an integrated processor/retailer, bilateral imperfect competition with separate processor and retailer, and bilateral imperfect competition with four adjacent upstream and downstream markets. Then, new empirical industrial organization models are estimated using the data with models that match the market structure under which the data were generated (true) and with models that reflect alternative market structures (alternative). The general model is derived using the production function approach without imposing the fixed proportion assumption. Monte Carlo simulation results indicate that the general model is preferred to alternative models that presume competitive behaviour by processors in primary input procurement and by retailers in the output market. Results indicate that less flexible models lead to biased market power estimates in the presence of market power in the corresponding input and output markets.
Most choice experiment studies consider the attributes, price of a product, and sometimes consume... more Most choice experiment studies consider the attributes, price of a product, and sometimes consumer characteristics such as age, gender, and income to explain respondents' selection of choices. • However, respondents' choices might be affected not only by product attributes and individuals' characteristics, but also by psychological variables such as attitudes, perceptions, and beliefs.
To determine willingness to pay (WTP) for a product, economists often employ discrete choice expe... more To determine willingness to pay (WTP) for a product, economists often employ discrete choice experiments. Within a discrete choice experiment, a respondent may be asked to answer multiple choice tasks to increase the amount of information available to the researcher. If a respondent is presented with too many choice alternatives or too many choice tasks, his or her attention allocation may change and affect choice selection. Failure to account for attention within model estimation may produce biased results and inaccurate test conclusions. Eye tracking technology is one method for measuring a respondent's change in attention while completing a survey. Due to the time and costs associated with eye tracking technology, many researchers will not use such information in their analysis. Alternative ways to accurately account for changes in attention are needed and may be found by specifying some other observable variable within a scale parameter function. Our research shows that although models with a scale parameter function may be able to detect changes in attention categorized by learning and fatigue effects, it does not fully capture attention changes to produce unbiased WTP values.
The impacts of market reforms on prices volatility in developing countries are not well understoo... more The impacts of market reforms on prices volatility in developing countries are not well understood because analysts have not been able to predict the impacts. This study investigates whether the reforms have exacerbated the degree of spatial volatility of maize price in Tanzania using ARCH-M model. Results indicate that developed regions might have experienced less volatile prices than less developed regions. Infrastructure development to increase the volume of trade between the regions is recommended.
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