Liu, Donald J.

By: Boetel, Brenda L.; Liu, Donald J.
This paper examines structural breaks in the vertical price relationships in U.S. beef/cattle and pork/hog sectors using monthly data of the past 40 years. A major methodological issue addressed is how to estimate price relationships when data contain intermittent structural breaks with unknown break dates. The adopted procedures endogenously search for structural break dates while explicitly accounting for this search in statistical inferences. Four breaks for the beef/cattle price relationship and three breaks for the pork/hog price relationship are identified. The estimation results further confirm the importance of allowing for structural breaks in the analysis of vertical price relationships.
By: Pritchett, James G.; Liu, Donald J.; Kaiser, Harry M.
The largest portion of dairy and milk checkoff funds is spent on generic fluid milk advertising. These funds are distributed among four distinct media outlets-television, radio, print, and outdoor. Spending too little on one media outlet or too much on another constitutes a missed opportunity to garner higher returns. Using 1984-93 data, this study compares historical advertising expenditures in each media outlet to the advertising expenditure decision of an optimal control model. Results show profits would have increased if funds had been reallocated from television to radio, print, and outdoor media outlets.
By: Liu, Donald J.; Sun, Chin-Hwa; Kaiser, Harry M.
The degree of market power exercised by fluid and manufactured processors in the U.S. dairy industry is estimated. Appelbaum's quantity-setting conjectural variation approach is cast into a switching regime framework to account for the two market regimes created by the existence of the dairy price support program: (a) government supported regime (market price is at the support price) and (b) market equilibrium regime (market price is above the support price). The model is also used to test whether government price intervention has a pro-competitive to anti-competitive influence on market conduct.