2011

December, 2011

Unpleasant Lessons from the Settlement of the West: Implications for the WAEA and Other Professional Associations

By: Tronstad, Russell
Parallels are drawn between shortcomings and events that occurred in our western heritage with current issues facing agricultural economists. Challenges are made in relation to conflict of interest policies, external funding, cultivating connections with experts outside our discipline, and relevance of research priorities. Survey data on research priorities of upper administrators and faculty within colleges of agriculture are compared to those of Western Agricultural Economics Association members. Upper administrators from land grant colleges rank research focused in the area of competitiveness and profitability less than areas of water usage, food safety, renewable energy, global climate change, or sustainability.
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December, 2011

The Effects of Vertical Organization on the Pricing of Differentiated Products

By: Shi, Guanming; Chavas, Jean-Paul
We investigate differentiated product pricing and the effects of vertical organization under imperfect competition. We rely on vertical measures of concentration (termed VHHI) to study how the exercise of market power varies with substitution/complementarity relationships among products and vertical structures. This approach is applied to U.S. soybean seed pricing under vertical integration versus licensing. We find evidence that vertical organization affects seed prices, with an impact ranging from 1.87% to 13.6% of the mean price. These effects vary by institutional setup.We also find that complementarity can mitigate price enhancements associated with market concentration.
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December, 2011

Household Production and the Demand for Food and Other Inputs: U.S. Evidence

By: Huffman, Wallace E.
The paper develops a new productive household model and a consistent household fullincome/ expenditure demand system for inputs and leisure of U.S. households. The demand system is fitted to U.S. annual aggregate data over the last half of the 20th century and findings include that the price and income elasticity of demand for food-at-home are roughly two times larger than for food-away-from-home and that food-at-home and away-from-home are substitutes. The price and income elasticity of demand for men’s unpaid housework are twice as large as for women’s unpaid housework and women’s and men’s unpaid housework are shown to be complements.
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December, 2011

Evaluating the Performance of U.S. Supermarkets: Pricing Strategies, Competition from Hypermarkets, and Private Labels

By: Volpe, Richard J., III
This study draws upon literature from the fields of agricultural economics, industrial organization, and business to study the performance of supermarkets in the United States. The empirical work draws from a rich dataset on the characteristics of supermarkets across the U.S. to test several hypotheses. Supermarkets utilizing everyday low pricing operate more efficiently than those using other strategies. Stores increase their performance by using strategies of their closest competitors. Competition with hypermarkets results in decreased supermarket performance, especially for smaller stores. Increases in private label sales relative to national brand sales are not necessarily related to increased performance.
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December, 2011

Evaluating Vector-Virus-Yield Interactions for Peas and Lentils under Climatic Variability: A Limited Dependent Variable Analysis

By: Elbakidze, Levan; Lu, Liang; Eigenbrode, Sanford
This study examines the effects of climatic conditions on interactions among pea and lentil yields, pea aphid Acyrthosiphon pisum (Harris) infestations, and outbreaks of PEMV (Pea enation mosaic) and BLRV (Bean leaf roll) viruses in the Palouse region of easternWashington. The study analytically and empirically evaluates the effects of aphid outbreaks on per acre yields, implicitly including the effects of adopted pest management activities and explicitly taking into account possible effects of climatic conditions on the severity of pea aphid outbreaks. The results show that aphid outbreaks have historically decreased pea and lentil yields by approximately 5% and 7% on average respectively.
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December, 2011

Economic Impacts of Zilmax(R) Adoption in Cattle Feeding

By: Schroeder, Ted C.; Tonsor, Glynn T.
The Food and Drug Administration recently approved the feeding of Zilmax(R) for cattle in the United States. This study determines direct net return benefits for early-adopting cattle feeders and beef packers. In addition, longer-run producer and consumer surplus measures are estimated as adoption impacts market prices and quantities. After markets adjust, cow-calf producers, cattle feeders, and consumers will gain from adopting the new technology.
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December, 2011

An Empirical Investigation of the Linkages between Government Payments and Farmland Leasing Arrangements

By: Qiu, Feng; Goodwin, Barry K.; Gervais, Jean-Philippe
This article investigates the impacts of decoupled and coupled program payments on farmland rental contract choices for a subset of U.S. crop farms using a principal-agent model.We consider cash and share contracts as well as hybrid contracts, which represent an increasingly prominent feature of U.S. agriculture. The conceptual framework suggests that restrictions on payments between contracting parties are ineffective and induce an offsetting contractual rearrangement. Empirical results from a multinomial logit model confirm that government support programs have large, significant effects on contract choices and that these effects vary by types of programs.
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December, 2011

The Role of Information and Prices in the Nitrogen Fertilizer Management Decision: New Evidence from the Agricultural Resource Management Survey

By: Williamson, James M.
This article investigates the impact of agronomic and price information on nitrogen fertilizer management. Excessive nitrogen applications can cause environmental degradation, and it is important to understand how information influences the application decision in order to develop effective conservation policies. The impact of soil N-tests on the rate of applied nitrogen is estimated. Farmers who use a soil test reduce their use of commercial nitrogen by up to 83 lbs/acre relative to non-testers. New evidence indicates that rising fertilizer prices encourage farmers to manage nitrogen more carefully. Estimated price elasticities of quantity demanded range from -1.67 to -1.87.
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December, 2011

Potential Economic Impacts of the Managed Haying and Grazing Provision of the Conservation Reserve Program

By: Campiche, Jody L.; Dicks, Michael R.; Shideler, David W.; Dickson, Amanda
The Food Security and Rural Investment Act of 2002 included a new provision that allowed managed haying and grazing (including the harvest of biomass), if consistent with the conservation of soil, water quality, and wildlife habitat, in return for partial reductions in the annual CRP payments. The legislation provided for managed (or limited use) haying and grazing on the CRP acreage rather than prohibiting all use. This research analyzed whether or not the alternative grazing and haying scenarios would dramatically impact the price of beef or hay, and we estimated the impact such changes would have on state economies.
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December, 2011

Effects of Environmental Regulation and Urban Encroachment on California’s Dairy Structure

By: Sneeringer, Stacy E.
Environmental regulatory compliance costs are often cited as a factor in dairy location decisions, but few studies estimate the impacts of regulation in this sector. This article uses California dairy regulations to examine the pollution haven hypothesis in agriculture. Dairy industry regulation has varied regionally within the state, with the more strictly regulated Southern California region losing production and the more environmentally lenient Central Valley gaining production. Results show that even after controlling for population density and property values, regulation had significant negative effects on dairying in Southern California.
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December, 2011

Economic and Environmental Impacts of Washington State Biofuel Policy Alternatives

By: McCullough, Michael; Holland, David W.; Painter, Kathleen M.; Stodick, Leroy; Yoder, Jonathan K.
A computable general equilibrium model is used to analyze the effectiveness of policy alternatives at achieving biofuel-related goals in Washington State. Policy regimes compared include blend mandates, generally funded volumetric and CO2e (CO2 equivalent) emissions-based tax/subsidy regimes, and revenue-neutral funded tax/subsidy regimes that use fossil fuel taxes to fund renewable fuel subsidies. Results suggest that a revenue-neutral CO2e emissions-based tax/subsidy is arguably the most effective single alternative for pursuing the full set of objectives emphasized in recent Washington State legislation.
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December, 2011

The SURE Program and Its Interaction with Other Federal Farm Programs

By: Ubilava, David; Barnett, Barry J.; Coble, Keith H.; Harri, Ardian
We investigate potential effects of the Supplemental Revenue Assistance Payments (SURE) program introduced in the 2008 Farm Bill. Results suggest little impact on optimal crop insurance purchase decisions, though the SURE program does seem to provide an incentive for mid-level insurance coverage. For producers in the price counter-cyclical payment (PCCP) program, SURE payments are actually higher (lower) when commodity prices are high (low). This is not the case for producers in the Average Crop Revenue Election (ACRE) program.
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August, 2011

Equity Basis Selection in Allocation Environments: An Empirical Analysis

By: Aadland, David; Koplin, Van
Successful formation and long-term stability of cooperative ventures is often linked to the perceived fairness of the cost and resource allocations that these ventures employ. Indeed, the lack of a consensus over what basis should be used for gauging equitable allocation can undermine the prospects for collaboration. We use irrigation cost sharing as a context for examining the equity basis selections of cooperative ventures that successfully form and endure. Our analysis reveals that these selections are explained by features of the cooperative environment and inequities in the derived benefits from the irrigation water.
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August, 2011

Improving the Use of Experimental Auctions in Africa: Theory and Evidence

By: Morawetz, Ulrich B.; De Groote, Hugo; Kimenju, Simon Chege
Experimental auctions have not been widely used in Africa. However, auctions are important tools for evaluating new products and technologies. To increase the quality of these experiments, we explore an alternative first-price bidding mechanism that is more similar to African market exchanges and we analyze factors likely to affect bidding. Experiments with African consumers show that the proposed first-price mechanism has no advantage over conventional second-price mechanisms. Results show high and significant cash-in-hand, experimenter, and time of day effects in main rounds, and significant ordering effects in test rounds. These effects need to be carefully considered when applying the Becker-DeGroot-Marschak mechanism in Africa.
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August, 2011

Revisiting Cheap Talk with New Evidence from a Field Experiment

By: Silva, Andres; Nayga, Rodolfo M., Jr.; Campbell, Benjamin L.; Park, John L.
We assess the reduction of hypothetical bias in consumers’ willingness to pay (WTP) for products by applying a generic, short, and neutral cheap talk script in a retail setting. Using an open-ended elicitation mechanism with non-hypothetical, hypothetical, and hypothetical with cheap talk treatments, our results indicate that the hypothetical WTP values are higher than the nonhypothetical values, but the hypothetical with cheap talk values are not significantly different from non-hypothetical estimates.
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August, 2011

The Effect of Communicating Ambiguous Risk Information on Choice

By: Melkonyan, Tigran A.
Decision makers are frequently confronted with ambiguous risk information about activities with potential hazards. This may be a result of conflicting risk estimates from multiple sources or ambiguous risk information from a single source. The paper considers processing ambiguous risk information and its effect on the behavior of a decision maker with a-maximin expected utility preferences. The effect of imprecise risk information on behavior is related to the content of information, the decision maker’s trust in different sources of information, and his or her aversion to ambiguity.
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