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By: Eun, Jihyun ; Sheldon, Ian ; Thompson, Stanley R.
We develop a heterogeneous firm model that allows us to identify the relationship between firm productivity and product quality. The model is used to analyze the impact of trade costs on food and agricultural trade based on a bilateral trade dataset covering 159 countries over the period 2010--2013. The results show that a high firm capability cutoff---implying an ability to produce high quality---limits export market entry. In addition, fixed and variable trade costs have a negative and significant impact on the probability of firms entering export markets, while variable trade costs have a negative and significant effect on firms' export levels.
By: Kuhn, Arnim ; Britz, Wolfgang
This study develops long-term scenarios combining trends in population numbers, incomes, and crop productivity for Sub-Saharan Africa (SSA) up to 2050 by using a recursive-dynamic version of the GTAP general equilibrium model. Results suggest that crop productivity will have a major impact on cropland expansion in SSA, giving potentially available cropland the role of a buffer that could smooth differences between future production outcomes. Another inherent smoothing factor will be countervailing trends in population and income growth that will diminish future differences in food commodity consumption per capita and limit the impact of African trends in the rest of the world.
By: Zhang, Yinjunjie ; Palma, Marco A.
Berkeley's sugar tax policy is currently under intense scrutiny and debate, while similar tax policies are rapidly expanding to other U.S. states. Contrary to theoretical predictions and policy expectations, previous literature documents short-term evidence of increased consumption of sugary drinks in response to a sugar tax policy. We investigate the underlying mechanism behind this behavioral anomaly using the Berry, Levinsohn, and Pakes (BLP) random coefficient (RC) logit demand model in characteristic space. We find that the consumption increase is mainly driven by a change in the average valuation of the sugar content going from negative to positive following enactment of the sugar tax policy.
By: Worley, Julian ; Dorfman, Jeffrey H. ; Russell, Levi A.
The impact of breed on carcass characteristics in various breeds of cattle has been well documented. This paper attaches these differences in breed characteristics to end revenue via different breed and breed combinations, percentage of Angus in pedigree, and purebred status. We find that while the genetics of many breeds is priced roughly in line with its value, some breeds are overpriced or underpriced by enough to significantly improve a cattle operation's profitability. We find that, relative to a pure Angus base, most breeds are less profitable in terms of carcass revenue per hundredweight.
By: Lakkakula, Prithviraj; Wilson, William
Forward pricing and allocation mechanisms for rail transportation serve critical functions for the grain-marketing system. We examine the effects of shipping costs on the origin and export basis using a panel simultaneous-equations model. Results indicate that the origin and export basis are determined simultaneously, with each one affected by the dynamic variability of shipping costs. On average, a $1 increase for the shipping costs decreases the origin basis by $0.19 and increases the export basis by $0.82/bu of soybeans. The interaction between shipping cost and exports on the export basis impacts both marketing and trading strategies in the grain-marketing system.
By: Cho, Whoi ; Brorsen, B. Wade
This article considers three possible issues about the design of the Rainfall Index Pasture, Rangeland and Forage (RI-PRF) crop insurance program: (i) how well the rainfall index matches actual rainfall, (ii) whether the county base values can be made more accurate using spatial smoothing, and (iii) optimal choices of RI-PRF crop insurance alternatives for producers and reducing the number of choices that producers have to make. Based on the results, we conclude that the RI-PRF crop insurance program needs to reduce the number of choices and provide suggestions for restricting the choices.
By: Ng, Horlick ; Ker, Alan P.
Although there is significant literature on technological change in U.S. crop yields, very little has been done with Canadian yields. We model the changing nature of county-level yields for barley, canola, corn, oats, soybean, and wheat in Canada. We use mixtures to allow and test for heterogeneous rates of technological change within the yield-data-generating process. While we tend to find increasing but heterogeneous rates of technological change, increasing and asymmetric yield volatility, and increasing absolute but decreasing relative yield resiliency, our results differ across crops and exhibit spatial bifurcations within a crop. Using a standard attribution model, we find changing climate has differing effects across crops.
By: Johansson, Per-Olov ; Kristršm, Bengt
The purpose of this note is to address a problem faced in using stated preference methods to estimate willingness to pay (WTP) for a project. The considered problem occurs under pure altruism. Even though an agent is equipped with well-behaved preferences, a conventional closed-ended (binary) valuation question may induce her to overrate or underrate her true WTP. On the other hand, an open-ended valuation format seemingly provides a correct answer, but such a format fails to be incentive compatible.
By: Otto, Steven ; Poe, Gregory ; Just, David
Rent-seeking behavior in payment for environmental services auctions reduces the number of affordable contracts and decreases environmental protection. We propose a new auction mechanism, the provision point reverse auction (PPRA), to mitigate this behavior. The PPRA includes a public component in which the probability of contract acceptance for one individual is affected by the sum of the other accepted offers. We provide theoretical support for the new mechanism and follow with laboratory experiments. The experiments yield average offers that are 12.57%--58.17% smaller than in alternate reverse discriminative auctions, with the exact difference dependent on the compared mechanism and auction parameters.
By: Speir, Cameron ; Lee, Min-Yang
We evaluate whether changes in geographic distribution of landings coincided with implementation of individual transferable quotas (ITQs) in the limited-entry groundfish trawl fishery on the U.S. Pacific coast. We use a spatial Theil index, kernel density functions of port revenue share, and Shorrocks index of intradistributional mobility to measure changes in spatial distribution. We find evidence of increased spatial concentration; however, this appears consistent with preexisting trends and not related to ITQs. Further, we find a high degree of intradistributional mobility in the revenue share of ports that coincided with ITQ implementation.
This paper discusses the relationship among agriculture, agricultural policy, and economic research. More specifically, this paper evaluates the relevance of current agricultural policy research on crop insurance in meeting the demands of modern agriculture. While forms of disaster assistance created as part of the New Deal persist today, it is argued that there are analytical tools available that allow for policy to be derived by utilizing better data and empirical methods.
By: Sampson, Gabriel S. ; Perry, Edward D. ; Tayler, Mykel R.
We estimate the effects of utility-scale wind turbines on agricultural land values in Kansas using parcel-level transaction data from 2001 to 2017 in a hedonic price model. By matching transaction data and wind turbine data at the common land units scale, we are able to ascertain on-farm effects as well as near-farm effects. Across all our analyses, the preponderance of results suggests that wind turbines do not affect agricultural property values, either on-farm or nearby, in a statistically significant way. Thus, our results cannot confirm that wind turbines will increase land values when installed on a parcel.
By: Raff, Zach ; Walter, Jason M.
This study evaluates the health benefits and abatement costs of the PM2.5 National Ambient Air Quality Standards (NAAQS) at coal-fired power plants. We find that the emission reductions from the PM2.5 NAAQS between 1995 and 2016 are sizable and that the health benefits from these reductions far exceed the abatement expenditures of affected plants. We then use this ex post analysis to simulate future health benefits and abatement costs in this sector from more stringent PM2.5 standards. Our policy simulation shows that tightening these standards to levels recommended by the World Health Organization also passes a benefit-cost test.
By: Lloyd-Smith, Patrick ; Becker, Marcus
This paper implements a seasonal travel cost model using administrative data from an online camping reservation system on over 71,500 individuals taking 144,000 trips to 68 campgrounds in Alberta, Canada. Using a KuhnÐTucker modeling framework, the per trip welfare impacts of campground closures ranges from $46 to $144. The substantial heterogeneity in welfare measures across campgrounds in per trip welfare measures for the same recreational activity in the same jurisdiction raises caution about the use of simple unit transfers of recreation values. Furthermore, we assess how the value of campground trips is associated with park attributes, campground amenities, and available activities nearby.
By: Lai, Yufeng ; Yue, Chengyan
This study estimates distributions of consumer willingness to pay (WTP) for organic and animal welfare product attributes using the store scanner data and compares the results to existing experiment-based findings. We find that the WTP premium estimated for organic eggs is consistent with experimental results, while estimated WTP premiums for animal welfare attributes are significantly lower than experimental findings. The results suggest the importance of considering biases when estimating the price premium for animal welfare attributes in experiments. In addition, consumers are not always willing to pay premiums for organic products. Our results also show that WTP premiums are heterogeneous across store brands.
This paper illustrates how to improve the immersiveness of an environmental valuation study using virtual reality (VR) headsets and real video footage. Recent research has used Òvirtual environmentsÓ to study this issue, but technological advances in VR headsets allow for a far greater degree of immersion. In this study, subjects were randomly shown either a VR video or static pictures of a polluted lake, before and after cleanup. They were then asked to indicate whether they would be willing to pay a random amount to improve lake water quality to the level shown. A discrete choice model is used to estimate and compare the willingness to pay for both groups. In this case study, there was no detectable effect on willingness to pay estimates. However, the technology may be beneficial for other valuation scenarios, particularly when the environmental change is complex or difficult for participants to evaluate.
By: Wei, Xuan ; Khachatryan, Hayk ; Rihn, Alicia
Neonicotinoid pesticide use in the U.S. ornamental horticulture industry continues to capture attention due to the potential health risks to pollinator insects. While several retailers have announced mandatory labeling policies for plants treated with neonicotinoids, little is known about how individual consumers react to a firmÕs disclosure of neonicotinoid use in production and the extent to which this additional information is valued. Here, we use a laboratory experiment to assess consumersÕ preferences for environmentally friendly production practices, focusing on neonicotinoid labeling. Despite broad consumer unfamiliarity with neonicotinoids, results show that consumers have differentiated preferences for neonicotinoid-related labels and information disclosure.
By: Tang, Minfeng ; Thompson, Nathanael ; Boyer, Christopher N. ; Olynk Widmar, Nicole J. ; Stewart, Terry S. ; Lofgren, Donna L. ; Minton, Nick
Past attempts to price bull attributes have relied on static marginal valuations due to cross-sectional data limitations. This analysis investigates whether bull buyersÕ marginal valuations of Angus bull attributes have changed over time using 17 years of bull auction data from Indiana. Results indicate statistically significant time effects on some traits (e.g., ribeye area, percentage intermuscular fat, ribeye-area expected progeny difference [EPD], and maternal-milk EPD). Not all of these effects align with prior expectations. Nonetheless, results have important implications for the beef industry in terms of signaling quality ques and incorporating proven information in the form of EPDs.
By: Park, Eunchun ; Brorsen, B. Wade ; Harri, Ardian
Many crop insurance studies have pointed out that considering spatial yield similarity can help provide more precise premium rating. We use Bayesian Kriging for spatial smoothing to consider such similarities when estimating crop yield densities. This articleÕs innovation is that the spatial smoothing is based on climate space, which is composed of climatological measures. We compare the climate-space smoothing with a general physical space (longitudeÐlatitude space) smoothing. The test results are favorable to the proposed climate-smoothing method. Climate smoothing performs particularly well in states that have many missing counties and varied climate due to varying topography.
By: Harri, Ardian ; Maples, Joshua G. ; Riley, John Michael ; Tack, Jesse B.
Theory of the firm suggests that optimal production levels decrease as output price becomes random. Firms operating in industries with long production lags are also exposed to input price uncertainty. This paper provides a novel decision-theoretic model in the presence of both input and output price uncertainty and uses U.S. beef sector data to test theoretical propositions concerning firm behavior. Our findings confirm that, in a two-stage production, the introduction of input price uncertainty leads to increased use of the input and an increased level of output in stage one and a decreased level of output in stage two.