Showing papers on "Commodity published in 1980"

Econometric Models for Probabilistic Choice Among Products

Abstract: I understand the discipline of marketing exists to answer questions such as: "Will housepersons buy more Brand A soap if its perfume content is increased?" Traditional econometric demand analysis provides no answer. Its attention has been concentrated on consumption levels of broad commodity classes (e.g., housing services), examined using aggregate market data, with demand models constructed on the twin pillars of economic rationality and consumer sovereignty. The market researcher has understandably looked elsewhere-to psychology and survey research-for answers to his questions. Realities have forced econometric demand analysts to broaden their perspective. Public intervention in the supply of some commodities, notably in the areas of transportation, energy, and communications, have required economists to recognize the marketing considerations implicit in issues of policy. (The decision of whether to build and how to design a public This paper reviews several recent developments in econometric demand analysis which may be of interest in market research. Econometric models of probabilistic choice, suitable for forecasting choice among existing or new brands, or switching between brands, are surveyed. These models incorporate attribute descriptions of commodities, making them statistical counterparts of the Court-GrilichesLancaster theory of consumer behavior. Particular attention is given to models which yield tree structures of similarities between alternatives. Also reviewed are methods for estimating econometric models of probabilistic choice from "point-ofsale" sample surveys. * Prepared for presentation at the Conference on Interfaces between Marketing and Economics, Graduate School of Management, University of Rochester, April 7, 1978. Research was supported in part by the National Science Foundation through grant SOC75-22657 to the University of California, Berkeley. Portions of this paper were written while the author was an Irving Fisher Visiting Professor of Economics at the Cowles Foundation for Research in Economics, Yale University.

An Approach to the Analysis of Feeder Cattle Price Differentials

Abstract: One of the difficulties faced by agricultural economic price analysts is the great variety of subclasses identifiable within commodity categories. Beef cattle price analysts face a particularly difficult problem in this regard. In addition to spatial, temporal, grade, and variety distinctions inherent in most agricultural commodities, cattle markets often discriminate sharply on the basis of weight, age, and sex. Most feeder cattle demand, supply, or price studies focus on a representative steer or heifer defined by an explicit set of characteristics that remains invariant across the data set (Maki). Readers are left to draw inferences for other sets of characteristics. Considerable attention has been

Foreign trade and domestic competition

Abstract: This paper contains estimates of the determinants of the commodity composition of U. S. trade flows and of price-cost margins in U. S. domestic manufacturing in a simultaneous context. Above-competitive profits in U. S. manufacturing appear to provide a powerful incentive to import competition. These imports, in turn, provide a check on the ability of domestic firms to earn monopoly rents. The estimates indicate that failure to account for imports leads to a substantial underestimation of the impact of market structure on price-cost margins. The linkages between exports and domestic market conditions appear to be of second-order importance.

A Model of the London Coal Trade in the Eighteenth Century

Abstract: Newcastle coal was the primary source of fuel for London by the eighteenth century. Two major characteristics of the trade were periodic attempts at cartelization by producers and the existence of a substantial per unit tax on the commodity. In order to measure the relative quantitative impact of market structure and tax policy, a linear supply and demand model is estimated using two-stage least squares. The major arguments of the paper are the cartels were ineffective in restricting supply, that the tax on coal raised its price significantly, and that final consumers bore the greatest share of the tax burden. To the extent that the high price of energy discouraged industrial location and residential migration into the london area, it may have hampered the growth of the city at a critical time. 16 references, 3 tables.

Forecasting commodity prices.

Abstract: After a brief description of the National Institute's approach to forecasting the price development of the major commodities in world trade this note presents a simple method for checking the aggregate outcome of that exercise.

Producer-Consumer Trade-Offs in Export Cartels: The Wheat Cartel Case

Abstract: Since the formation of the Organization of Petroleum Exporting Countries (OPEC), several models of cartel-competitive fringe markets for an exhaustible resource have been developed. Derivations of Nash-Cournot equilibrium price paths under such a regime and insightful behavioral descriptions of limit pricing by monopolists facing potential competition have enriched the literature concerning this market structure (Salant and Gilbert and Goldman). In addition, the gains to producers from cartelization in the oil, copper, and bauxite industries have been derived empirically (Pindyck). Largely in reaction to OPEC, numerous discussions have focused on an important but different commodity than those mentioned above. Several proposals (supported by many producers and consumers) have been put forth to form a cartel in wheat among the major exporters: the United States, Canada, Australia, and Argentina.1 If such a cartel were organized, which group or groups have the most to gain? The above studies on exhaustible resources do not distinguish between producer and consumer effects in the exporting countries largely because domestic demand for this type of good is small relative to the total amount exported. In oil, for example, there is little need to distinguish between a producer export cartel, which maximizes producer returns, and a government cartel which maximizes the welfare of all groups since the solutions would be very similar. However, this is not necessarily the case for other commodities where domestic demand is an important component of market structure (e.g., in wheat the domestic demand is large relative to total wheat exports).2 The purpose of this paper is to consider a market in which the commodity in question has a relatively large domestic demand component and to demonstrate that a sharp distinction has to be made between a producer export cartel and a government export cartel. This paper shows (abstracting from implementation issues raised by Caves, Pindyck, and McCalla and Schmitz) that producers actually may lose from a government cartel. The conditions under which this can happen are derived theoretically. The model is then applied to the world wheat economy; and, interestingly, the empirical results suggest that there is a strong possibility that producers would, in fact, lose from a government wheat cartel if there are decreasing returns in production unless compensated by a tax on consumers. This result raises several important policy issues.

International Technology Issues: Southern Needs and Northern Responses

Abstract: Although no one minimises the importance of foreign exchange earnings, capital inflows, or domestic savings, there has recently been a relative shift in emphasis in the less developed countries toward the role of technology in development efforts. In many less developed countries, the possibilities of raising capital either at home or abroad now look less daunting than the problems associated with technological progress. There has emerged, in consequence of these new perceptions, a new set of issues for international debate and resolution—issues that, unlike those of commodity policy, market access, monetary reform, or aid, were scarcely heard of only a decade or so ago.

Exploitation and interrelated tenancy and credit transactions.

Abstract: It is by now generally admitted that rural markets are often imperfect and moveover, transactions in two or more markets are interlinked. Interlocking of markets is supposed to take place when there is a simultaneous trade in more than one commodity or service between the same pair of individuals and this linking of trade in different commodities or services is found to be essential because delinking is either not feasible or too costly.1 Thus, for example, delinking may be impossible if the market for some commodity or service exists only in conjunction with other markets, or if one of the parties has sufficient market power to insist on linking.2 One of the most reported forms of interlinking is the simultaneous trading in the land lease and credit markets. The ^landowner is observed to provide consumption and/or production loans to his tenant. It the context of imperfect capital markets this may be because a tenant lacking suitable collateral may find in his landlord the only source of credit while the landlord may be willing to provide credit to his tenant because he is better informed about his tenant's loan repayment capacity and also because he can accept collaterals which are not acceptable to other sources of credit, for example the standing crops on leased-in land or the tenant's labour, etc. Share-cropping is another instance of interlinking. In such a tenancy contract land is supplied by the landlord while the tenant supplies the labour. A possible rationale for this arrangement could be that by renting out land the landlord is essentially buying the labour of the entire family of the tenant including that of the women and children of the

Export Instability in Historical Perspective: Further Results

Abstract: Today's less developed countries maintain that high instability in export prices is a serious obstacle to their economic development. History shows, however, that some of today's developed countries also experienced high price instability in the international markets they served when they were at a comparable phase in the development process. Current recommendations to institute a network of international commodity agreements for the most important primary products exported by the LDCs seem beside the point in light of this evidence.

A review of three research programs in quantitative modelling in the bureau of agricultural economics

Abstract: Elements of three of the BAE's research programs in economic modelling of the rural sector, namely, the modelling of agricultural production systems, rural commodity markets and agriculture within a general equilibrium framework, are reviewed with emphasis on the use of such models in policy work. Suggestions are made for further modelling in these areas.

Forecasts of key commodity flows at a regional port

Abstract: Some practical aspects of forecasting key commodity flows for the Port of Metropolitan St. Louis are heuristically examined. Scenarios of regional economic growth are developed, detailed industrial market studies are assessed, and regressions are adjusted from baseline output to reflect the impact of intermodal opportunities, the needs and demands of target industries, and the unique position of the port below Locks and Dam 26. Key forecasts of flows of cash grains and grain products, coal, petroleum and petroleum products, chemicals, and fabricated metals are examined. Operational problems resulting from growth in commodity flows at the port are identified. Finally, the need for port studies to identify and capitalize on the unique locational and industrial assets of individual regions is discussed.

The future of commodity programs: some comments.

Abstract: Three excellent papers addressing the future be different. None of the papers really takes of commodity programs were presented at the into account this broader perspective, includSAEA Annual Meeting in February 1980. ing the general equilibrium implications it sugEach has some very important strengths. gests, although Erickson and Johnson sin a "Commodity Policy Issues for the 1980s" by little less in this respect than do the other Erickson and Johnson is almost encyclopedic authors. in its coverage, while at the same time being 2. Second, despite the titles of the papers, issue-oriented and presenting some very pertinone of them is really forward looking. With nent data. Pasour's "A Critique of Federal their documentation of changes that have been Agricultural Programs" is an effective assesstaking place and their tentative extrapolation ment of commodity programs as they existed to the future, Erickson and Johnson again in the past. Goodwin and his colleagues do probably come off best. But even they do not yeoman's work in attempting to defend curreally look to the future and speculate about rent programs in "The Future of Federal Prowhat it might be like, or about what institugrams for Southern Commodities." I assume tions might prevail in the decade ahead. the contrast between that paper and Pasour's 3. Third, none of the authors really proposes was intentional. Certainly the two of them tonew institutional arrangements to address gether help to focus the issues. problems as they might be expected to emerge As a "reactor," I faced something of a dilemin the future. In my view, more changes have ma. In all, the three papers comprise some 76 occurred in policies as a result of the 1973 and pages of material material which is very 1977 legislation than most people seem to asmeaty and which represents very different persume. The shifts to a system of price corridors spectives. In my initial attempt to critique and to a farmer-owned reserve, among other each of the papers, I found that any one of things, were significant departures from the them could have taken up all of my alloted past, not just minor changes in and extensions time. That says something about the quality of of old programs. As we look to the future, it the papers, for each of them is indeed provocaseems useful to inquire whether conditions will tive. be so changed as we move well into the coming I soon abandoned the approach of doing decade that policies and programs will undergo individual critiques, however, and instead tried still further significant changes. In the spirit of to consider the papers as a group. I came to the being provocative, let me suggest that they following conclusions. will, and then speculate about what some of 1. First, none of the papers reflects the the changes might be. broadened perspectives that I believe we now Although I too will not be definitive in terms need in evaluating agricultural and/or comof new institutional arrangements that might modity programs.' Agriculture is involved in a serve us in the future, let me at least attempt much broader range of political and economic to indicate where some of our challenges lie and issues today than in the past, as well as in a what form some of the program might take. broader range of economic policies. Because of First, let us consider some of the internationthe importance of trade to agriculture, it is no al issues before us. The first and most longer appropriate to evaluate policies through important point is simply the significance of the prism of a closed-economy model. The shift trade to U.S. agriculture. Clearly most of our to a flexible exchange rate regime changes domestic commodity programs are now significantly the relationship of agriculture to predicated on a strong export performance, the rest of the economy. And the stage of dewithout which these programs would be very velopment itself requires that our perspectives different.

Commodities, finance and trade : issues in North South negotiations

Abstract: The essays present an up-to-date picture of the North-South negotiating process with respect to commodities. Some of the essays examine general issues concerning these negotiations, looking at topics such as power relationships and debt problems; others form coherent case studies. The development of the Common Commodity Fund also is discussed.

Transfer-Pricing and LDCs: Some Problems of Investigation

Abstract: This paper intends to review some of the main problems which arise for developing host countries in the investigation of transfer-pricing of commodity trade by transnational corporations (TNCs) in manufacturing industry. It concentrates on the pricing of intra-firm trade (i.e. trade between associated units of a company operating in several countries), but part of the analysis will also be relevant to the pricing of inter-firm trade (between unrelated parties) by TNCs in developing countries.

Commodity policy issues for the 1980s.

Abstract: tential of U.S. agriculture will be needed to In exploring the commodity policy issues for meet the anticipated level of demand. the 1980s, we keep in mind how those issues are related to the ability of the policymaker to FACTORS RAISING POLICY ISSUES OR develop policy instruments for influencing sup- AFFECTING POLICYMAKER DECISIONS ply and demand. The next section summarizes the current thinking pertaining to aggregate Aggregate Production Capability supply and demand in the 1980s. With that background, we discuss several issues that are There is a school of thought that the United likely to arise or that will be factors affecting States has reached relative resource equilibp9licymaker decisions. Specific commodity ob- rium in its agricultural plant. The view is that servations follow. In conclusion we examine the United States no longer has a latent rewhat the identified issues or factors could serve available to provide an "immediate" promean for different groups affected by commod- duction response to a short-supply situation. ity policy.

Seasonal variations in demand and the economic regulation of trucking

Abstract: The author considers the theoretical argument that freedom from geographic and commodity restrictions will enhance intertemporal utilisation of truck capacity. Data from exempt agricultural carriers in the limited states and unregulated interstate highway transport in Australia are used to support the results of a simulation model discussed in the article. Although the model suggests that geographic restrictions contribute much more to poor utilisation than do commodity limitations, it is thought that this may be due to the unrealistically broad commodity groups assumed by the model. The importance of commodity restrictions might have been much greater if conditions under which trucking companies operate had been more faithfully reproduced. It is concluded that the deregulation of the trucking industry would not only eliminate the geographic and commodity restraints of the present system but also introduce rate flexibility as an additional means of improving the utilisation of truck capacity throughout the year. (TRRL)

Farmer Cooperatives in International Grain and Oilseed Markets

Abstract: In recent years, several grain and oilseed producer cooperatives have expanded operations in international marketing. Some of these expansions include the purchase of part of Alfred C. Toepfer Co., an international commodity trading company, by several North American and European cooperatives; the expansion of Japanese cooperatives into U.S. grainhandling and storage functions; integration of Italian cooperatives into processing industries in developing countries; and the enlargement of one interregional cooperative into the fourth largest U.S. grain exporter. We suggest that these innovations are preliminary signals of a structural change in international grain trade. Our objective is to examine the changing role of farmer cooperatives in the complex international arena of grain and oilseed trade. Four phenomena are explored: (a) farmer cooperative location in the world soybean, coarse grain, and wheat market structure; (b) market share trends of U.S. cooperatives at the local, regional, and export levels; (c) the increasing importance of foreign cooperatives in the international grain trade; and (d) factors that might constrain or enhance the growth of cooperatives in the world grain trade.

An Analysis of Australian Exports to its Major Trading Partn's:Mid-1960s to Late 1970s*

Abstract: ‘Constant market shares’ analysis is used to examine Australia's exports to its major trading partners. Declining shares of overall UK. EEC and US markets were partly offset by increasing shares of Japanese imports. Australian exports of alumina, iron ore, coal, other metalliferrous ores and some non-ferrous metals and semi manufactures gained larger shares of imports, but Australia lost ground in other commodities. Un favourable commodity composition effects were responsible for these losses. There were some offsetting gains arising from favourable market distribution effects. predominately because of Japanese purchases of Australian goods Losses' due to lack of ‘competitiveness’ in agricultural commodities were important in the 1970s, particularly for exports to the UK.

Australian agriculture and world commodity trading arrangements

Abstract: A long period of international discussion and negotiation about new global trading arrangements ended in 1979. Despite changed economic and institutional circumstances, and growing deficiencies in the. existing arrangements for agricultural trade, these negotiations have done little to improve the efficiency with which the world's agricultural resources are used. Rather, they have tended to institutionalise the status quo. This is likely further to disadvantage efficient producers and to lead to a growing bilateralism in trading relationships, with consequent increased politicisation and potential for conflicts and instability.

Agricultural protectionism in industrialized countries and its global effects : a survey of issues

Abstract: This paper analyzes the effects of agricultural policies in industrialized nations on their domestic economies, the world commodity markets, and developing countries A selective review of major theoretical and empirical studies on the subject is presented with suggestions of areas needing further research The examination reveals serious misallocation of resources in the agricultural sector, which is largely due to agricultural protectionism in industrialized countries The benefits of this protectionism are often offset by considerable economic cost Policy measures should offer flexibility and the possibility of adjustment in agriculture that would allow a more optimal global production pattern and resource allocation