Showing papers in "American Journal of Agricultural Economics in 1990"
TL;DR: In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand as mentioned in this paper, and some of these approaches may lead to significant errors.
Abstract: In the literature, a variety of approaches have been used to calculate demand elasticities in almost ideal demand system (AIDS) models of demand. It is common to estimate the linear approximate almost ideal demand system (LA/AIDS) instead of the AIDS. When the LA/AIDS is estimated, all of the previously reported approaches to compute elasticities are theoretically incorrect. This paper presents correct formulas for LA/ AIDS elasticities and illustrates the potential errors from using incorrect computing The almost ideal demand system (AIDS) of Deaton and Muellbauer (1980a,b) has become popular in recent years (Anderson and Blundell; Blanciforti and Green 1983a,b; Blanciforti, Green, and King; Chalfant; Eales and Unnevehr; Fujii, Khaled, and Mak; Fulponi, Heien and Willett; Murray; Parsons; Ray). A variety of approaches to computing elasticities has been used, and some of the approaches may lead to significant errors. This paper clarifies the differences between alternative approaches to estimating demand elasticities in AIDS models.
582 citations
TL;DR: In this paper, the truncation effects of government price supports on the distribution of corn and soybean prices are considered. And an acreage supply response model is developed under expected utility maximization.
Abstract: An acreage supply response model is developed under expected utility maximization. The resulting framework is used to specify and estimate a system of risk-responsive acreage equations for corn and soybeans in the United States. Particular attention is given to the truncation effects of government price supports on the distribution of corn and soybean prices. Also, a wealth variable is included in the acreage equations. The empirical results indicate that risk and wealth variables play an important role in cornsoybean acreage decisions. The analysis also shows that cross-commodity risk reduction is important in acreage allocation decisions.
493 citations
TL;DR: For example, Pinkerton as discussed by the authors discusses the evolution of tribal fisheries management in the US Pacific Northwest Treaty Indian tribes and Washington State, and the role of social learning in the redesign of fisheries management.
Abstract: Introduction: attaining better fisheries management through co-management -- prospects, problems and propositions Evelyn Pinkerton PART ONE Indian--state co-management in the US Pacific Northwest Treaty Indian tribes and Washington State: the evolution of tribal fisheries management in the US Pacific Northwest Fay G. Cohen Getting to co-management: social learning in the redesign of fisheries management Norman Dale Negotiating salmon management on the Klamanth River Danny Jordan PART TWO Non-indigenous commercial fishermen creating regional and local co-management Co-management or co-optation?: the ambiguities of lobster fishery management in Southwest Nova Scotia John F. Kearney Co-management of a clam revitalization project: the New Jersey "Spawner Sanctuary" program Bonnie J. McCay Alaska's regional aquaculture associations co-management of salmon in southern southeast Alaska Donald F. Amend PART THREE Creative institutional response: evolving aboriginal management regimes under new state regulation The Alaska Eskimo Whaling Commission: successful co-management under extreme conditions Milton M. R. Freeman Prospects for co-management of marine animals in Alaska Steve J. Langdon The development of state/tribal co-management of Wisconsin fisheries Thomas R. Busiahn PART FOUR Provisions in comprehensive claims for Native self-management Co-management and the James Bay Agreement Fikret Berkes Co-management provisions of the Inuvialuit Final Agreement Nancy C. Doubleday PART FIVE BC Native fishermen: tradition and innovation The struggle to integrate traditional Indian systems and state management in the salmon fisheries of the Skeena River, British Columbia Mike Morrell The fisheries co-management initiative in Haida Gwaii Miles Richardson & Bill Green Strategies and possibilities for Indian leadership in co-management initiatives in British Columbia J. R. MacLeod The future of fisheries co-management: a multi-disciplinary assessment R. Bruce Rettig, Fikret Berkes & Evelyn Pinkerton
451 citations
TL;DR: The availability of credit allows both greater consumption and greater purchased input use and thus increases welfare of the farmers as mentioned in this paper, which is an important element in agricultural production systems, allowing producers to satisfy the cash needs induced by the production cycle which characterizes agriculture.
Abstract: Credit is an important element in agricultural production systems. It allows producers to satisfy the cash needs induced by the production cycle which characterizes agriculture: preparation, planting, cultivation, and harvesting of the crops are typically done over a period of several months in which very little cash revenue is earned, while expenditures on materials, purchased inputs, and consumption must be made in cash. Cash income is received a short time after the harvest. In the absence of credit markets, farmers would have to maintain cash reserves so as to facilitate production and consumption in the next cycle. The availability of credit allows both greater consumption and greater purchased input use and thus increases welfare of the farmers.
420 citations
TL;DR: In this article, a large sample (N = 2223) allowed random segmenting of the data into specification, estimation, and out-of-sample prediction portions, and the prediction results allowed comparison of the statistical models' robustness.
Abstract: Truncated Poisson and truncated negative binomial count data models, as well as standard count data models, OLS, nonlinear normal, and truncated nonlinear normal MLE were used to estimate demand for deer hunting in California. The truncated count data estimators and their properties are reviewed. A large sample (N = 2223) allowed random segmenting of the data into specification, estimation, and out-of-sample prediction portions. Statistics of interest are therefore unbiased by the specification search, and the prediction results allow comparison of the statistical models' robustness. The new estimators are found to be more appropriate for estimating and predicting demand and social benefits than the alternative estimators based on a variety of criteria.
386 citations
TL;DR: In this article, the authors investigated how information about cholesterol, as measured by a newly constructed index based on medical journal articles, has affected U.S. demand for shell eggs and found that information on the links between cholesterol and heart disease had decreased per capita shell egg consumption by 16% to 25% by the first quarter of 1987.
Abstract: U.S. per capita shell egg consumption has declined steadily since 1955 despite a falling real price. This paper investigates how information about cholesterol, as measured by a newly constructed index based on medical journal articles, has affected U.S. demand for shell eggs. The results of a fixed coefficient model indicate that information on the links between cholesterol and heart disease had decreased per capita shell egg consumption by 16% to 25% by the first quarter of 1987. A simple changing coefficient model indicates that cholesterol information has changed shell eggs' own price and income elasticities, so that the 1955–87 falling egg price and rising income increased egg consumption less than they otherwise would have.
331 citations
TL;DR: In this article, Braverman and Stiglitz proposed alternative approaches to the theory of institutions in economic development, Pranab Bardhan rational peasants, efficient institutions and a theory of rural organization.
Abstract: Introduction: alternative approaches to the theory of institutions in economic development, Pranab Bardhan rational peasants, efficient institutions and a theory of rural organization - methodological remarks for development economics, Joseph E.Stiglitz. Part 1 Land and labour: theories of sharecropping, Nirvikar Singh a comparison of principal-agent and bargaining solutions - the case of tenancy contracts, Clive Bell contracts with eviction in infinitely repeated principal-agent relationships, Bhaskar Dutta et al production relations in semi-arid African agriculture, Hans Binswanger et al. Part 2 Credit and interlinked transactions: rural credit markets - the structure of interest rates, exploitation and efficiency, Kaushik Basu credit and agrarian class structure, Mukesh Eswaran and Ashok Kotwal credit rationing, tenancy, productivity and the dynamics of inequality, Avishay Braverman and Joseph E.Stiglitz on choice among creditors and bonded labour contracts, T.N.Srinivasan some aspects of linked product and credit market contracts among risk-neutral agents, Clive Bell and T.N.Srinivasan a note on interlinked rural economic arrangements, Pranab Bardhan interlinkages and the pattern of competition, Debraj Ray and Kunal Sengupta. Part 3 Marketing and insurance: agricultural institutions for insurance and stabilization, David M.Newbery peasants' risk aversion and the choice of marketing intermediaries and contracts - a bargaining theory of equilibrium marketing contracts, Pinhas Zusman. Part 4 Co-operatives, technology and the State: agricultural producer co-operatives, Louis Putterman institutional analysis of credit co-operatives, Avishay Braverman and J.Luis Guasch agrarian structure, technological innovations and the State, Alain de Janvry et al.
325 citations
TL;DR: In this paper, the authors used meta analysis to summarize the benefit estimates derived from travel cost recreation demand models and highlight the important research issues in model development and offer a consistency check to the procedures used in benefit transfer analyses for policy evaluations.
Abstract: This paper uses meta analysis to summarize the benefit estimates derived from travel cost recreation demand models. After reviewing approximately 200 published and unpublished studies prepared from 1970 to 1986, 77 were found to report either consumer surplus estimates or sufficient information to derive them. Using these estimates of the consumer surplus per unit of use from each study, it was possible to evaluate the influence of variables describing the site characteristics, the activities undertaken at each site, the behavioral assumptions, and the specification decisions. The findings provide clear support for using econometric methods to summarize results from diverse empirical studies. They highlight the important research issues in model development and offer a consistency check to the procedures used in benefit transfer analyses for policy evaluations.
295 citations
TL;DR: In this paper, the existence and magnitude of a procompetitive effect depend upon a number of structural and strategic factors including competitive relations among the non-co-op processors and a cooperative's membership and pricing policies.
Abstract: Important characteristics of many agricultural markets are costly to transport raw products and relatively few processors, one or more of which is often a cooperative. This paper analyzes pricing behavior in these oligopsonistic, spatial markets and focuses specifically upon the conjecture that cooperatives may have a procompetitive effect on the behavior of rival non-co-op processors. The existence and magnitude of a procompetitive effect is shown to depend upon a number of structural and strategic factors including competitive relations among the non-co-op processors and a cooperative's membership and pricing policies.
227 citations
TL;DR: In this paper, the authors distinguish between ex ante and ex post capital access, i.e., the ability of agents to finance production costs (e.g., labor and purchased inputs costs) which must be paid ex ante, that is, prior to the actual realization of production.
Abstract: Access to capital and its distribution across agents can profoundly shape the structure and performance of an agrarian market economy.' It is conceptually useful to distinguish between ex ante and ex post capital access. Ex ante capital access denotes the ability of agents to finance production costs (e.g., labor and purchased inputs costs) which must be paid ex ante, that is, prior to the actual realization of production. Ex post capital access, that is access to capital after the realization of the production process, is of particular importance as an insurance substitute in low income agrarian economies where contingency markets are imperfect. Buoyant ex post capital access would permit an individual to stabilize consumption year to year even as production fluctuates annually. A number of theoretical models have ex-
213 citations
TL;DR: Tregarthen and Young as mentioned in this paper argue that market forces should play a greater role in water allocation, emphasizing the inefficiency of allocating water to grow low value and surplus crops, while nonagricultural water users struggle to develop expensive new supplies.
Abstract: Economists argue that market forces should play a greater role in water allocation---emphasizing the inefficiency of allocating water to grow low value and surplus crops, while nonagricultural water users struggle to develop expensive new supplies. Agriculture accounts for 850%--95% of water use in many western states, and the cost of reducing irrigated acreage so that water can be available for other uses is generally far less than the cost of developing new water supplies (Young). Moreover, transfer of only a small portion of water used in agriculture would be sufficient to satisfy foreseeable nonagricultural water demands, so disruption of western U.S. agricultural production would be negligible (Tregarthen, Young). Over the last decade, market transfers have become a more common means to reallocate water, though nowhere could such voluntary transactions be characterized as a "free market" (Saliba and Bush). Every western state imposes conditions on water transfers. Such policies generate uncertainties and costs for transferors and have been described as inefficient and unnecessary impositions on the market (Tregarthen, Anderson and Johnson). Should public policy seek to minimize the cost of transferring water, or can transactions costs actually facilitate efficient reallocation by accounting for social costs of transfers?
TL;DR: In this paper, tests for quasi-separability, net substitutability, and perfect substitution are developed and implemented on an almost ideal demand system model of the Japanese meat sector.
Abstract: Tests for quasi-separability, net substitutability, and perfect substitutability are developed and implemented on an almost ideal demand system model of the Japanese meat sector. The data set satisfies both symmetry and homogeneity. There is evidence of net complimentarity between chicken and dairy beef and chicken and pork. The tests indicate that Japanese Wagyu beef is considered a separate commodity to both imported beef and dairy beef. The results also indicate that fish can be treated as separable in the Japanese meat demand system.
TL;DR: In this article, the authors test the Armington assumptions of homotheticity and separability with data from the international cotton and wheat markets and show that the empirical results reject the assumptions.
Abstract: The Armington trade model distinguishes commodities by country of origin, and import demand is determined in a separable two-step procedure. This framework has been applied to numerous international agricultural markets with the objective of modeling import demand. In addition, computable general equilibrium (CGE) models commonly employ the Armington formulation in the trade linkage equations. The purpose of this paper is to test the Armington assumptions of homotheticity and separability with data from the international cotton and wheat markets. Both parametric and nonparametric tests were performed, and the empirical results reject the Armington assumptions. This has important implications for international trade modeling and CGE modeling.
TL;DR: In this article, an alternative theory is offered, based on the assumptions that buyers and sellers are spatially dispersed and intra-regional transport costs are significant, which implies that the market is a linked oligopoly (or oligopsony) and that market integration tests are tests of alternative oligopoly price formation processes.
Abstract: Studies of spatial market integration draw their implications from a theory which assumes that there are no intraregional transport costs. An alternative theory is offered, based on the assumptions that buyers and sellers are spatially dispersed and intraregional transport costs are significant. This implies that the market is a linked oligopoly (or oligopsony) and that market integration tests are tests of alternative oligopoly price formation processes. For example, collusive basing-point pricing produces results typically assumed to imply efficiently integrated markets, while competitive FOB pricing does not. The theoretical implications are illustrated with an analysis of hog prices in Canada.
TL;DR: This paper showed that the marginal opportunity cost of a dollar of U.S. federal government spending is more likely to be in the range of $@@•@@1.20 to $@@°1.50 than the typical estimates.
Abstract: Economic welfare analyses of farm programs typically assume that the direct social opportunity cost of subsidy payments is one dollar per dollar of government spending. Recent literature suggests that the marginal opportunity cost of a dollar of U.S. federal government spending is more likely to be in the range of $@@‐@@1.20 to $@@‐@@1.50. This implies that the net social costs of farm programs that involve government spending are significantly greater than the typical estimates. In addition, the normative efficiency ranking of alternative policies is sensitive to the marginal opportunity cost of government spending.
TL;DR: Three parsimonious models are hypothesized to represent com yield response to nitrogen and phosphorus and the results support the restrictions imposed by the Mitscherlich-Baule model.
Abstract: Three parsimonious models are hypothesized to represent com yield response to nitrogen and phosphorus. Each model imposes specific restrictions with regard to the elasticity of factor substitution and growth plateau. Nonnested hypothesis tests are used to evaluate the competing hypotheses. The results support the restrictions imposed by the Mitscherlich-Baule model. For these data, corn response is characterized by limited substitution between nitrogen and phosphorus and a growth plateau. Further, the cost of using optimal input levels implied by the Mitscherlich-Baule if it were not “true” is small relative to the other parsimonious forms and a translog approximation.
TL;DR: In this article, the effects of heterogenous inputs on linear response and plateau (LRP) models are compared. But the results show that the LRP model is not optimal for corn growth and that the effect of heterogeneous inputs on LRP is negligible.
Abstract: 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.
TL;DR: In this paper, a conceptual model is developed which provides insight into how information affects willingness to pay for environmental commodities and the results support the contention that information is important for accurate environmental commodity consumer valuations.
Abstract: A conceptual model is developed which provides insight into how information affects willingness to pay for environmental commodities. A refutable hypothesis of the effects of a specific information type on the magnitude of willingness to pay for an environmental commodity is developed. This hypothesis is tested using a contingent valuation method experiment. Results indicate that information affects willingness to pay in a theoretically plausible manner. The results support the contention that information is important for accurate environmental commodity consumer valuations.
TL;DR: In this article, the flow of labor out of production agriculture was analyzed using a two-sector model of occupational choice, and the economic determinants of the migration of all farm workers and farm operators were established.
Abstract: The flow of labor out of production agriculture is analyzed using a two-sector model of occupational choice. A migration equation is specified and tested empirically using aggregate data for the United States. The economic determinants of the migration of all farm workers and farm operators are established. Farm labor is found to be responsive to changes in the returns to agricultural labor relative to nonfarm labor returns. Given this responsiveness, policies intended to increase farm income will affect the level of agricultural employment.
TL;DR: In this paper, a general model of adoption of input-conserving technologies by competitive firms is introduced using drip irrigation as an example, and an environmental regulation such as a drainage effluent charge is shown to influence adoption.
Abstract: A general model of adoption of input-conserving technologies by competitive firms is introduced using drip irrigation as an example. An environmental regulation such as a drainage effluent charge is shown to influence adoption. Early adopters are likely to be producers with less efficient fixed assets (land of low quality or antiquated capital), higher input costs (higher water prices or greater depth to groundwater), and in more environmentally sensitive regions. Simulations show that drainage regulations can be expected to play a major role in adoption of more efficient irrigation technologies in California. Thus, conservation may be a key to solving resource scarcity problems and reducing external environmental costs.
TL;DR: Logit analyses are used in evaluating survey data concerning rice stink bug management by Texas rice producers, and adoption of sweep nets and treatment thresholds increase the probability of spraying by 11.3%.
Abstract: 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%.
TL;DR: The authors found that older farmers are less likely to adopt computers, less likely find them useful, and make fewer applications of the computer in their business, while education level is positively associated with computer adoption and with increased numbers of applications made of the computers.
Abstract: Although computer technologies have evolved rapidly, farmers have been slow to adopt these technologies. This research identifies factors influencing farmers' adoption of computers and the number and type of applications for which the computer is used. Ohio commercial farmers were randomly sampled and analyzed using multinomial logit techniques. Results suggest that older farmers are less likely to adopt computers, less likely to find them useful, and make fewer applications of the computer in their business. Education level is positively associated with computer adoption and with increased numbers of applications made of the computer.
TL;DR: In this article, a nonparametric approach to expenditure-constrained profit maximization is developed, and a deterministic frontier profit function is constructed with and without expenditure constraints.
Abstract: A nonparametric approach to expenditure‐constrained profit maximization is developed. A deterministic frontier profit function is constructed with and without expenditure constraints. Foregone profit is used as dual evidence for the existence of expenditure constraints. Individual evaluations on performance and expenditure constraints are produced. Empirical analysis is based on survey data for California rice farms. Seventeen of the eighty‐two surveyed farms experience profit loss as a result of expenditure constraints.
TL;DR: The authors showed that 80% of all water diversions and nearly 90% of water consumption in the western United States occur in irrigated agriculture, strongly suggesting that small percentage reallocations from agricultural to non-agricultural uses could satisfy growing non-aggregative water demands for decades.
Abstract: The development of new water supplies has grown increasingly costly, both in financial and environmental terms. Public values related to instream flows, preservation of natural areas, and wildlife have increased sharply relative to the values of traditional water uses. In such a setting, reallocation of existing supplies becomes increasingly attractive, and water transfers have been hailed as the solution to western U.S. water shortages (e.g., Anderson, Saliba and Bush, Howe et al). A major U.S. Geological Survey-funded study (MacDonnell et al) has found frequent water transfers in several western states (Colorado, New Mexico, and Utah) but infrequent transfers in other states (e.g., California and Wyoming), the frequency being strongly affected by the institutional structure for effecting transfers and the pressure on water supplies. A glance at water use data (U.S. Geological Survey) shows that 80% of all water diversions and nearly 90% of all water consumption in the western United States occur in irrigated agriculture, strongly suggesting that small percentage reallocations from agricultural to nonagricultural uses could satisfy growing nonagricultural water demands for decades.
TL;DR: In this article, direct tests of the efficient markets hypothesis are performed for the live hog futures market using market survey data, and the results support the efficient market hypothesis in that live Hog futures prices (a) do not react to anticipated changes in reported information, (b) do react significantly and in the expected direction, and (c) generally adjust to unanticipated information on the day following release of the reports.
Abstract: Strong concerns about how efficiently live hog futures prices react to U.S. Department of Agriculture Hogs and Pigs Reports have been raised by livestock producer groups. Using market survey data, direct tests of the efficient markets hypothesis are performed for the live hog futures market. Two-limit tobit models account for institutional price limits. Results support the efficient market hypothesis in that live hog futures prices (a) do not react to anticipated changes in reported information, (b) do react significantly and in the expected direction to unanticipated changes in reported information, and (c) generally adjust to unanticipated information on the day following release of the reports.
TL;DR: In this article, a method for evaluating the reliability of option-based price probability assessments is developed based on the calibration concept, and empirical tests using goodness-of-fit criteria are applied to four agricultural commodities.
Abstract: A method for evaluating the reliability of option-based price probability assessments is developed based on the calibration concept. Empirical tests using goodness-of-fit criteria are applied to four agricultural commodities. Results suggest that assessments in the corn and live cattle markets are reliable, but such assessments overstate the volatility of soybean prices and understate the location of hog prices.
TL;DR: In this paper, two empirical procedures are utilized to consider the LOP in international markets for U.S. agricultural commodities, and results provide support for a rational expectations view of the law of one price.
Abstract: The law of one price (LOP) is an important ingredient in theories of international trade. Typical analyses of the LOP assume that parity should hold contemporaneously. This assumption overlooks temporal elements of trade. Recognizing this fact, we expect parity to hold for expected prices. Two empirical procedures are utilized to consider the LOP in international markets for U.S. agricultural commodities. The first utilizes econometric procedures to test an expectations augmented version of the LOP. A second approach uses nonparametric procedures to provide an alternative consideration of expectations. In each case, results provide support for a rational expectations view of the LOP.
TL;DR: In this paper, a model of policy making where governments seek to maximize support from social groups through the combination of both PERT (social welfare-increasing) and PERT(welfare-transferring) policies is developed.
Abstract: A model of policy making is developed where governments seek to maximize support from social groups through the combination of both PERT (social-welfare-increasing) and PERT (welfare-transferring) policies. The implicit weights of a political preference function shift with a change in the relative cost of interest group organizing. Attention is paid to the degree of wealth transfers as total social welfare increases because of PERT policy changes. The model demonstrates that, in the case of two competing groups, the weight given to one group in the allocation of social surplus will increase as total social welfare increases with a bias toward the other group. The relative weights placed on consumers and producers based on PEST policies alone are misleading indicators of the political influence of groups. A number of general implications of this political economic analysis for the reform of public policies are investigated.
TL;DR: In this paper, the mean and variance of the output price of fed beef are compared with different expectations models, such as adaptive expectations, naive expectations, adaptive expectations and rational expectations.
Abstract: Supply response models for fed beef incorporating risk by including both the mean and variance of output price are developed, estimated, and compared. Six different estimates of the mean and variance are obtained from futures prices; ARIMA processes; and naive, adaptive, and rational expectations models. Empirical estimates are compared using nonnested testing procedures and indicate that the choice of the expectations model significantly influences elasticity estimates and whether supply response is positive or negative. Empirical evidence does not support any one model in particular, suggesting that expectations are heterogenous rather than homogenous. Most agricultural production is characterized by a lag between the time input decisions are made and the time output actually reaches the market. As a result, supply response functions are based on the hypothesis that quantity produced depends on known input prices and producers' expectations of output price. Expectations frequently have been modeled based solely on past prices. Examples include naive expectations, adaptive expectations (extensively reviewed by Askari and Cummings), and autoregressive integrated moving-average (ARIMA) schemes. Gardner as well as others have used futures prices to estimate producers' expected prices, although Chavas, Pope, and Kao found that futures prices are not good proxies for producers' expectations