How Effective is the Invisible Hand? Agricultural and Food Markets in Central and Eastern Europe

Since the seminal work of Adam Smith, markets have been considered an efficient tool for co-ordinating the behaviour of economic agents. The basic characteristic of a market economy is that the complex system of interaction among individuals is not centrally coordinated. Under the assumption of profit and utility maximisation (and a whole set of assumptions about the institutional framework), relative prices and their change over time provide the signals that guide, like an invisible hand, the allocation of resources, i.e., the structure of production and the intensity of input use in the various production processes. They do this by co-ordinating the activities of economic agents, i.e., of resource owners, producers, intermediaries, traders, and consumers. After system change in the former Soviet Union and in Central and Eastern Europe (CEE) central economic planning had to be replaced by other forms of co-ordination. The general direction in all transition countries was towards a market economy, but the speed and depth of reforms towards an environment in which markets can evolve differed largely between countries, sectors and between different phases during the past 15 years. IAMO Forum 2005 focuses on this development and discusses the functioning of markets, the requirements for this, and the advantages and disadvantages of other co-ordination mechanisms under different environments in the agricultural and food sectors in Central and Eastern Europe. CEE agri-food markets deserve researchers' and policy makers' attention for several reasons. Two of them regard the high demand for support to policy decisions that aim to stimulate economic and social development in the region. In most CEE countries, the significance of the agricultural and food sector is relatively high with respect to income and employment. In particular, rural areas can benefit from the development of this branch of the economy. Also, there is marked indication that agri-food markets in CEE are not ensuring exchange as frictionless as possible. This means that large benefits can be expected if potential improvements of the economic environment are implemented and if individual agents adapt optimally to that environment. Another motivation for economic research on transition countries is that we are looking at a huge region that started almost as a vacuum with regard to institutional settings. This means that a wide range of substantially different settings were introduced in the respective countries, and were only weakly confined by political rigidities or path dependencies. From a distant perspective, the repeated fundamental shifts in recent economic policies almost evoke the impression of a trial and error approach. The consequences of distinctively different options (across countries and periods) can be observed in a way almost similar to a laboratory situation. Such unique opportunity has attracted economists, particularly those interested in institutional economics, to conduct research on CEE. However, this also means that the experiences made in CEEC can enhance the general understanding of what markets can do and what the limitations of market coordination are. This volume contains selected contributions presented at IAMO Forum 2005 and gives an overview of the major topics discussed there. Partial analyses of specific economic problems usually abstract from the general economic framework which is assumed to be more or less constant as expressed in ceteris paribus clauses. Oftentimes, the set of institutional conditions is even assumed to be sufficiently well-described by the framework used in neoclassical models. Particularly for transition countries, this has frequently led to spurious results because crucial aspects of the framework actually in place were not considered, and sometimes were not even thought of. An extreme and very obvious example is the neglect of the effects of the replacement of monetary by nonmonetary exchange in phases of a barter economy. There is no generic approach to avoid unintended omission of crucial framework conditions, but it must generally be emphasised that a broad look at the various interdependent markets and at the entire socioeconomic context of a country is needed before going into detail. Descriptive analyses of the situation in various markets form part of such a broad look. The contributions of POPP, FERTÃ et al., WILKIN et al., and HEIN in the chapter Selected analyses from CEEC provide excellent examples, and focus on market developments in new EU member countries. On the one hand, the papers show the heterogeneity of problems e.g. due to largely differing farm structures. On the other hand, several common patterns can be observed: The market shares and power of large processors and retailers (hypermarkets, etc.) are increasing. Also, international (especially intra-EU) trade in commodities has increased in response to CAP-induced price harmonisation. Both tendencies weaken the market position of farmers, particularly small entities which cannot supply in volumes sufficient for large processing and trade firms. Within the food industry concentration increased as many smaller firms could not comply with EU processing standards and had to quit the market. The increased size and specialization of large producers, as well as of large processors, made many of those firms co-ordinate business with each other through long-term contractual agreements rather than by relying on spot markets. This tendency is very distinct in the fruit and vegetable sector, as WILKINâs contribution describes. Two contributions draw attention to the institutional framework itself, mainly by looking at circumstances which prevent market allocation from leading to an optimal outcome. HOBBS describes factors that impede investment and growth by drawing on transaction cost economics. Situations typical for transition countries are highlighted where e.g. transparency is not sufficient or the existence and reliable enforcement of contract or corporate law are not guaranteed. NUPPENAU stresses the need for the appropriate and precise formulation of land property rights, which should evoke a balance between governance and exclusion. The importance of appropriate and reliable institutions to avoid flaws is emphasised. But even with suitable institutions, transaction costs cannot be reduced to zero. The main reason for this is that since agents may gain form a head start of information, incentives to reveal their knowledge are quite restricted. Furthermore, some of the information required to make correct decisions is not available. This especially concerns information regarding all future contingencies. An uncertain future and the asymmetric distribution of information impose special problems when decisions have long-term effects and agents are linked together through investment decisions. This offers possibilities for opportunistic behaviour, i.e., when an agent behaves in a way that allows him to extract rents from the partners' activities. The friction induced in such situations may result in a market outcome that is biased by transaction costs. Mitigating this bias should be a goal of public policy but it is also in the interest of (at least some of the) private agents involved. This issue is discussed in more detail in the papers dealing with alternative governance structures. A number of contributions to IAMO Forum highlight approaches for measuring the well-functioning of markets. While studies that aim to directly measure transaction costs are very rare and are necessarily limited to comparing only very specific portions of transaction costs, most studies focus on indirect indicators. These usually start from the idea that in a well-functioning, competitive market any supply or demand shocks are reflected in price changes, not only in the particular market where the shock occurs but also in other, related markets, i.e., in different locations or at different stages of the production and marketing chain. Consequently, an approach for assessing the functioning of markets is to compare price differentials with processing-, marketing- or transfer-costs, or â since these costs are usually difficult to quantify â to observe price differentials over time. Accepting the assumption that the costs reflected by price differentials are more or less constant (or stationary) over the observed time span, any additional price changes or a lack of price co-movement is interpreted as an indication for insufficiently connected or insufficiently functioning markets. Three contributions in the chapter Analytical approaches for measuring market efficiency describe analyses which mainly focus on the vertical dimension, i.e., between market stages. BOJNEC, in his descriptive price analysis for several agricultural products in Slovenia since 1991, finds a heterogeneous development of the farm gate/consumer price spread: The processing and marketing margins increased for wheat and beef while they declined for grapes (processed to wine), sugar and poultry. BRÃMMER and ZORYA, as well as BAKUCS and FERTÃ, use cointegration analysis to describe the degree and nature of vertical price integration in the Ukrainian wheat market and the Hungarian pork market, respectively. Both studies find that price changes are transmitted vertically, that there is a tendency to "correct" any deviations from some underlying equilibrium price-relationship. However, such error correction mechanisms are found not to be a constant, universal force. In the Hungarian paper, it could only be found for a sub-period of the observed time span, excluding the highly volatile early 1990s. Also, equilibrium was found to be achieved by adjustment of farm gate prices only while the retail prices were found to be exogenous, i.e., not responding to any disequilibrium. The paper on Ukraine shows that adjustment processes between wheat and wheat flour prices cannot be sufficiently described by a constant error correction mechanism for the period 2000 to 2004. In fact, four different regimes of adjustment processes were found to have been in force, reflecting particular phases of largely differing market situations and political interventions. The functioning of markets depends on several crucial conditions. One of these conditions concerns the availability of information. Only if agents have perfect and complete information will the exchange lead to an outcome in which no individual can be better off without reducing the welfare of others. However, in the real world this condition regarding information is not fulfilled. Information is not perfect, since the future cannot be predicted with certainty. Incomplete information results from, first, not all information being revealed, and second, individuals not possessing the mental capacity to collect and process all information. Moreover, because of its asymmetric distribution, information can be regarded as a resource that can be exploited by agents. This means that there are incentives to hamper the diffusion of information to the public domain. In general, the more uncertain the future is and the more information is tacit, the worse markets will function, and the more beneficial become alternative mechanisms of coordination. Three papers dealing with this issue of organisational choice. HANF focuses on governance structures within supply chain networks that are appropriate for allowing an optimal flow of information between the involved individuals while retaining the necessary hierarchy for efficient implementation of strategic decisions. MAACKâs analysis shows that there is strong mutual interest between producers and processors of berry fruits to reduce marketing and procurement risk, respectively. This can be achieved by switching from spot market exchange to contractual supply agreements. A prerequisite for such agreements is that a well-balanced distribution of risks and risk premiums between the farmer and processor is implemented. This means that processors, who â facing a multitude of small producers â are used to opportunities for exerting market power, have to agree to cover part of the production risk through appropriate contractual clauses. Finally, BALINT looks at the various marketing channels used by Romanian farmers and finds that a self-enforcing dualism exists. For commercially-oriented farmers who can supply large quantities, marketing directly to traders, wholesalers and processors is most favourable and involves relatively low transaction costs. Although this form of supply-relationship is usually not based on contractual agreements, it can still be characterised by a certain stability over time. In contrast, small farmers whose production does not considerably exceed the subsistence level incur relatively high (per unit) transaction costs in selling their produce on local markets and to other farmers. Another aspect of organisational choice is the question of whether ownership of production factors is transferred or only the right to use them temporarily. The uncertainty of future developments implies that the possession of resources cannot be only regarded from the point of view of income generation at a certain point in time. With perfect foresight, there is no difference whether a factor is rented or purchased, because the remuneration would be the same. This perfect substitutability is no longer given when the future is uncertain. Income generation, then, is only one feature of ownership. Additional aspects such as insurance, wealth, and speculation as motivations for possession affect the value of ownership and thus shift the demand and supply curves of the factor. HURRELMAN picks up this issue in her analysis of the Polish land market and shows the impact of additional grounds for valuing property on the decision to rent or to buy land. Uncertainty may also affect the specialization of factor use. Allocating a factor of production to different production activities reduces the risk of income instabilities, but at the cost of specialization gains through economics of scale. Moreover, the decision on income combination is â besides risk â affected by a complex interaction of other determinants. GLAUBEN et al., analyse these interactions for the case of part-time farming in China and show how the decision of income combination is affected by household characteristics, human capital and other variables. Incomplete and imperfect information not only causes individuals to choose optimal governance modes, often it is also understood as a call for government intervention. The selected papers in the chapter on policy intervention plead for careful selection and coherent implementation of policy instruments. BENNER, as well as KUHN, highlight the significance of information diffusion and argue in favour of government intervention in this area. However, both emphasise that these interferences should be used carefully and be adjusted to specific market failures. Both argue that setting up information systems would improve the functioning of markets. BENNER also discusses possible negative impacts if governments that engage in setting up and enforcing product and process standards try, at the same time, to foster a sector like agriculture through support in marketing. The latter activity affects the governmentâs (crucial) credibility in the first activity. KUHN points to negative welfare effects and budgetary requirements of an intervention system which is implemented to increase price stability. Moreover, when a government intervenes in market allocation or intends to provide rules that should facilitate the exchange on markets, it has to take into account that the new regulation has to be implemented in a coherent manner. This requires the various policy regulations and institutional settings to be complementary and not cause frictions which hamper the functioning of the system. LERMAN and SHAGAIDA highlight this aspect in their discussion of the Russian land market, where bureaucracy and high costs for the registration of property rights can be regarded as a major cause of the low number of land transactions. However, since economic activities take place in a dynamic environment, the comparative static point of view may lead to inappropriate policy formulation. WANDEL discusses this aspect in the context of competition policy. From a comparative static point of view, market power has to be assessed negatively because of the distortions of resource allocation. However, monopoly profits are an indicator of extra rents and thus provide incentives for market entry. On the one hand, this thread may lead to special pricing schemes and/or to the accelerated development of technological change so that a monopolist can consolidate its market position. But it is possible, on the other hand, that market entry may in fact happen. In this case, one would observe structural change, which would be accompanied by an improved use of resources. This in turn means that competition policy should not be oriented towards an optimal market structure but towards the facilitation of market entry so that competition can discover market opportunities and determine the optimal structure of the market. The present volume shows the wide range of interesting and controversial topics that are concerned when looking at co-ordination, particularly on markets in CEE agri-food sectors. It remains a hope that the heterogeneity and dynamics of the developments will decrease as successful constellations of framework conditions, organisational choices and individual behaviour become more and more obvious and widespread in the region. Conversion to sustainable, balanced patterns might take place, but this cannot be taken for granted. However, chances for such development are better the more stable and balanced political developments, as well as international co-operation, become. We hope that the academic community will contribute towards such goal.Agribusiness, Community/Rural/Urban Development, Industrial Organization, International Development, Labor and Human Capital, Land Economics/Use, Political Economy,

Instruments of Transport Policy.

The material in this Working Paper was generated as input to DETR's Guidance on the Methodology for Multi Modal Studies (GOMMMS). DETR subsequently decided only to provide summary information on transport policy measures, and to leave the consultants involved in individual multi modal studies to make their own assessment of individual policy measures in the context of specific study areas. It has been decided to make this fuller document available as a reference source. The purpose of the review of policy measures was to provide summary information on the range of policy measures available, experience of their use and, based on past studies, their potential contribution to the range of policy objectives specified for GOMMMS. The review was based on an earlier one included in the Institution of Highways and Transportation's Guidelines on Developing Urban Transport Strategies (1996). This material was updated using references published since 1996 and expanded to cover policy measures relevant in inter-urban areas. It had been intended to circulate it for comment before publishing a revised version. However, DETR decided to use an abridged version before this consultation was complete. It should be borne in mind that this document has not, therefore, undergone the peer assessment which had been intended. To avoid unnecessary further work, the material is presented as it had been drafted for the GOMMMS Guidance document. The only modifications have been to change the chapter and paragraph numbers, and to remove the cross references to other parts of the Guidance document

How effective is the invisible hand? Agricultural and food markets in Central and Eastern Europe

This volume of proceedings, available both as hard copy and pdf , is a compilation of selected contributions to the IAMO Forum 2005, which will be held in Halle (Saale), Germany, at the Institute of Agricultural Development in Central and Eastern Europe from June 16-18, 2005. CONTENTS: Agricultural and food markets in Central and Eastern Europe: An introduction; Stephan Brosig, Heinrich Hockmann. Agricultural markets in CEE - An overview; József Popp. Regoverning agrifood markets in CEEC - Poland's pork and apple markets; Jerzy Wilkin, Malgorzta Juchniewicz, Dominika Milczarek. Regoverning markets in the Hungarian dairy sector; Imre Ferto, Csaba Forgács, Anikó Juhász, Gyöngyi Kürthy. Analysis of competitiveness, economic efficiency and distortions in the Estonian milk sector; Piret Hein. Building sustainable supply chains: The role of institutions; Jill E. Hobbs. How effective is the invisible hand on technological and institutional change and the reduction of transaction costs in the food sector? Ernst-August Nuppenau. How effective is the visible hand of the government in stabilising the wheat and flour price relation in Ukraine? Bernhard Brümmer, Sergiy Zorya. Marketing margins and price transmission on the Hungarian pork market; Lajos Zoltán Bakucs, Imre Ferto. Slovenian retailing market structures, retail prices, and size of marketing margins for food staples; Štefan Bojnec. Scarcity and preferences (Data Envelopment Analysis of Moscow region corporate farms); Nikolay Svetlov. Buying or renting in? Selling or renting out? Exploring contract choice on the Polish land market; Annette Hurrelmann. The organisation of buyer - Supplier relations in the food chain: The case of the German fruit processing industry and Polish farmers; Kai Maack. Supply Chain Networks: Analysis based on strategic management theories and institutional economics; Jon H. Hanf. Dynamics of labour market participation: What drives Chinese farmers into and out of off-farm employment? Thomas Glauben, Thomas Herzfeld, Xiaobing Wang. Market channels and commercial orientation in Romania; Borbala Balint. Land reform and the development of agricultural land markets in Russia; Zvi Lerman, Natalya Shagaida. Public quality schemes - Helping ensure well-functioning agri-food markets in Central and East European countries? Eckhard Benner. Competition, market power and antimonopoly policy: A Hayekian perspective; Jürgen Wandel. An ex-ante analysis of a minimum price system for Ukraine; Oleg Nivyevs'ki, Arnim Kuhn --

Spectrum sharing in cognitive radio networks

Cognitive radio networks are the next step to tackle scarcity in wireless networks given the increasing demand of radioelectric spectrum where the proposed solution is to share said resource to improve this situation. In the present article, a review of the current state of spectrum sharing in cognitive radio networks. To achieve this purpose, the articles published over the last 4 years on the matter were reviewed including topics such as mobile networks and TV. Some studies and simulations proposed to share the spectrum is shown. The current state of the studies reveals that there has been significant progress in this research area yet it is necessary to continue similar studies and set in motion different schemes

Impacts of Foreign Retail Entry on the Host Country: The Canadian Apparel Industry

By the later decades of the twentieth century, retail internationalization was no longer the activity of a few multi-national retailers; revising the traditional view of retailing as a national business and the need to understand the process of internationalization. Academic research enriched the understanding of this activity, moving away from the early use of surveys to delve into the specific processes of the retailers in order to properly analyze foreign expansion activity. Initial research focused on the perspective of the firm, contributing to knowledge of the why, where, and how of the internationalization process. As this research expanded its scope, it became necessary for researchers to explore when internationalization occurs and to document what was the impact of internationalization on the host country. This call for research was made by Dawson (2003), who proposed a framework for the study of foreign impact on the domestic retailers of a host country. This study utilizes the Dawson model to measure, analyze, and explain the when and what of the retail internationalization process. In recognition of the complexity of the retail internationalization process, it was determined that the study would focus on one type of impact: changes in sectoral competitiveness. It was also determined that this study should be undertaken in a market and retail sector where substantial foreign entry had occurred and could potentially be measured, analyzed and explained. Therefore, the study is undertaken in the Canadian apparel sector between 1989 and 2007. The study was conducted as a mixed method research in two stages: an empirical study of market data and an interview study of industry experts. Since retail functions at the local level, the shopping centre was used as a microcosm of the market and provided empirical evidence to measure impacts in a temporal sense and by intensity. The interviews with industry experts were used to collaborate and explain the mall data, providing important first-hand context to explain the retail internationalization process. This study contributes to the validation of the Dawson model as a tool to measure and explain the impacts of foreign entry on a host country’s sectoral competitiveness, and through its methodology will provide the necessary modifications to the model for continued study of the retail internationalization process

Research and Extension Capabilities: Program Economists in New South Wales Agriculture

In 1997 the economists in NSW Agriculture conducting applied economics research at its larger research stations were assigned to the Department's major programs of the Department. This report reviews some of their achievements since that time. The report begins with a section describing the role of Program Economists and their management. Then follows a brief review of the main areas of interest of each of the twelve economists. A large section of the report is devoted to outlining major areas of research and extension where program economists, often working cooperatively, have made a significant contribution. These areas include: Analyses of market conditions for agricultural products; Field crop economics; Grazing and pasture economics; Integrated weed and pest management economics; Farming systems economics; Provision of farm management information; Research and extension evaluation and policy. Aspects reviewed in these areas included the key findings from research, research objectives, future directions of research and for each area, a selection of the most significant publications produced by program economists. The final section of the report is a listing of publications by program economists since 1997. Since then they have written 9 book chapters, 57 refereed journal papers, 23 refereed research bulletins, 40 papers in conference proceedings, 94 invited and contributed conference papers, 56 miscellaneous reports and work papers; and 43 farm management papers.Research and Development/Tech Change/Emerging Technologies, Teaching/Communication/Extension/Profession,

Seismic activity and market efficiency : A case study of 2023 Turkish earthquakes

The occurrence of earthquakes presents a significant challenge, often resulting in high casual-ties and extensive damage. Beyond the immediate humanitarian impact, earthquakes also have far-reaching consequences for financial markets, which is seen as the barometer for economic resilience. In 2023, Türkiye experienced two earthquakes with magnitudes of 7.7 Mw and 7.6 Mw, occurring in close proximity causing a high number of casualties and eco-nomic damage. The literature remains divided on the precise effects of earthquakes on stock markets, with some studies suggesting significant negative impacts, while others find no statistically signifi-cant effects. Against this backdrop, this thesis seeks to investigate the impacts of the 2023 earthquakes on the Turkish stock market. Employing an event study methodology, the analy-sis focuses on sectoral indices and individual stock returns constituting the market index. The findings of this study reveal that while the earthquakes did not yield statistically significant results on the event day, subsequent days witnessed fluctuating effects, with returns fluctu-ating between positive and negative. Consequently, cumulative abnormal returns also failed to demonstrate statistical significance. However, studying at the sectoral level demonstrated a different picture. The results also showed that while many sectors experienced negative impacts initially, the dispersion of these effects throughout the event window was evident. Notably, sectors such as basic ma-terials and non-metal products exhibited statistically significant positive abnormal returns. On the other hand, the insurance sector emerged as particularly vulnerable, bearing statistically significant negative impacts. In conclusion, this thesis underscores the complex interplay between seismic events and financial markets, emphasizing the importance of sectoral analysis in understanding market dynamics during crises. While the overall market response may lack statistical significance, the differential impacts across sectors provide valuable insights for policymakers and inves-tors alike. Also, further research and refinement of methodologies are essential for deepen-ing our understanding of the relationship between earthquakes and financial markets

Product Service System for Volvo Trucks: Finding new business value compliant with IFRS 16 leasing regulations.

The International Accounting Standards Board (IASB) in January 2016 published International Financial Reporting Standards (IFRS 16), new guidelines on leasing standards with an effective date of January 1st, 2019. IFRS 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract, i.e. the customer (‘lessee’) and the supplier (‘lessor’). Under IFRS 16 the lease classification test i.e. classifying a lease as being on balance sheet or off balance sheet is done away with. This is as a result of the guideline’s expectations that all leases are treated as on balance sheet entries. The objective of this thesis is to develop a model to support Volvo Truck’s goal of offering IFRS 16 compliant off balance sheet leasing solutions. Utilizing a 3 step framework, this study identifies the off balance sheet threshold set in IFRS16 and matches it to a Product Service System classification. A Business Model Canvas is utilized to develop a business model that supports this off balance sheet contract. The thesis finds that by exercising the substantive right to substitute the truck during a lease deployment and by offering capacity based contracts, Volvo Trucks can provide a Product Service System centered, off balance sheet solution, to its leasing clients in compliance with the IFRS 16 regulations

Essays on optimal spectrum management for expanding wireless communications

Wireless communications are experiencing an unprecedented expansion. The increasing mobility of the communication society and the pace of technological change are growing pressure for more spectrum to support more users, more uses and more capacity. Thus, spectrum management has become an extremely important part of wireless communications. A few regulators are changing their traditional ‘command and control’ approach. Nevertheless, many features of optimal spectrum management are still widely discussed. This work is aimed at contributing to that discussion. The key insight is that spectrum management can benefit from more liberal spectrum sharing. This work set out to answer three main research questions: (i) whether there is a theoretical framework which can be used to analyze and guide spectrum policy reform, when moving from a traditional ‘command and control’ regime to a market-inspired one; (ii) whether it is possible to design a plausible mechanism which can promote efficient allocation and assignment of spectrum commons; (iii) whether (and how) technological developments could enable band sharing methods outside the traditional management framework and without harmful interference. The literature on transition economics and policy was used to help answer the first research question. Evidence from liberalizing countries was positively analyzed to discuss reforms of spectrum allocation and assignment methods. Most countries have adopted strategies that gradually change their spectrum policies and started by using more liberal methods to assign spectrum. It is also argued that future spectrum reforms might benefit from insights presented in the transition economics literature. A translation of a model on cartel quotas under majority rule is proposed to answer the second research question. The work verifies, firstly, that an analogous set of properties is satisfied under our assumptions and that the median-index theorem applies, mutatis mutandis, to our setting. Thus firms bidding to acquire spectrum commons contribute a minimum amount of their wealth; the sum of contributions offered is then compared to other bids for the same spectrum, which is allocated to the highest bidder. The last research question considers novel ways of spectrum sharing that might be enabled by technological developments. The work explores contributions, from various research areas, regarding management of scarce resources. Those contributions are discussed with respect to shared spectrum access. It is suggested that spectrum management might benefit from methods which enable the management of pooled (intermittent) demands for access, especially methods in line with fair sojourn protocols