The brave new world: imperfect information, segregation costs, and genetically modified organisms

The introduction of genetically modified (GM) crops in the mid 1990s appeared to be the latest in a string of technological innovations in agriculture. However, consumer resistance, particularly in Europe has limited the sector’s enthusiasm. One response to the limited enthusiasm has been the emergence of segregated markets for GM and non-GM products. These separated markets reduce economic welfare because they require additional costs in the marketing system. Offsetting these segregation costs, however, the introduction of GM technologies offers increased economic welfare through reduced commodity prices for consumers who are indifferent to the presence of GM traits and increased profits to producers who adopt GM technologies. This study develops the combinations of segregation costs and increased supplies that leave societal surplus unchanged. Any GM technology that yields a larger increase in supply for any segregation cost depicted in this relationship meets the compensation principle and, thus, improves societal welfare. In this case, market based adoption of these technologies improve economic surplus. On the other hand, technologies that yields less increase in supply for any segregation cost reduces societal welfare. Under this scenario, market based adoption will not be welfare improving and, hence, government regulation may be required.genetically modified (GM) crops, compensation principle, segregation costs, Pareto principle, immiserizing growth, Agricultural and Food Policy, Research and Development/Tech Change/Emerging Technologies,

WHERE IS THE WALRASIAN AUCTIONEER FOR AGRICULTURAL MARKETS? AN EXAMINATION OF THE MARKETING INSTITUTION

In the classical development of economic equilibrium and efficiency, transaction costs are seldom considered. This study develops a micro- market model of an agricultural market based on quality differences. The study then develops a model of market structure based on the New Theory of the Firm. Using the two models, we draw conclusions about economic potential for E-Commerce.Marketing,

TWO APPROACHES TO MEASURING THE ECONOMIC IMPACT OF STARLINK CORN ON U.S. PRODUCERS

The discovery of StarLink corn in U.S. food products caused considerable disruption in the corn markets in 2000 and 2001. We estimated two models on the impact of StarLink corn over the 2000/2001 marketing year. In the first model, to segregate the U.S. corn market, identity preservation costs (IP costs) were imposed on the U.S. grain handling system to deal with both domestic and export sales of food corn and export sales of non food corn to Japan. In the second model, structural changes in corn demand were taken into account. Without taking into account Loan Deficiency Payment Program (LDP) payments, significant costs were incurred by producers as a result of StarLink. However, the effectively reduced the loss in revenue that would have been caused by StarLink, since there were periods of time immediately following the discovery of StarLink during which the market price dropped below the loan rate for corn. It was estimated that StarLink caused U.S. producers to lose between $25 and$290 million in revenue.Research and Development/Tech Change/Emerging Technologies,

Trajectory-correction propulsion system Patent

Spacecraft trajectory correction propulsion syste

Pricing exotic options using strong convergence properties?

In finance, the strong convergence properties of discretisations of stochastic differential equations (SDEs) are very important for the hedging and valuation of exotic options. In this paper we show how the use of the Milstein scheme can improve the convergence of the multi-level Monte Carlo method, so that the computational cost to achieve an accuracy of O(e) is reduced to O($\epsilon^{−2}$) for a Lipschitz payoff. The Milstein scheme gives first order strong convergence for all 1−dimensional systems (one Wiener process). However, for processes with two or more Wiener processes, such as correlated portfolios and stochastic volatility models, there is no exact solution for the iterated integrals of second order (Lévy area) and the Milstein scheme neglecting the Lévy area gives the same order of convergence as the Euler-Maruyama scheme. The purpose of this paper is to show that if certain conditions are satisfied, we can avoid the calculation of the Lévy area and obtain first convergence order by applying an orthogonal transformation. We demonstrate when the conditions of the 2−Dimensional problem permit this and give an exact solution for the orthogonal transformation. We present examples of pricing exotic options to demonstrate that the use of both the orthogonal Milstein scheme and the Multi-level Monte Carlo give a substantial reduction in the computation cost

INSTITUTIONAL ECONOMICS AND THE EMERGENCE OF E-COMMERCE IN AGRIBUSINESS

The emergence of E-commerce in the 1990s heralded the arrival of the New Economy. However, the failure of numerous dotcoms since early 2001 has led to a debate regarding the future direction of E-commerce and its potential relevance for agribusiness. This study examines the economic implications of E-commerce for agribusiness within the framework of New Institutional Economics. The New Institutional Economics implies that E-commerce has the potential to reduce direct transactions costs in agricultural markets, but that it also may add additional indirect transactions costs. Depending upon the tradeoff between these costs, an institutional innovation which reduces the transactions costs may provide the impetus for an alternative marketing channel for agricultural output. Two models of institutional change are explored. The North model of changes in the rules of the game is found to be more consistent with the advent of E-commerce than the model of technological change suggested by Schumpeter.E-commerce, marketing channels, New Institutional Economics, Schumpeter, Agribusiness, Institutional and Behavioral Economics,

VERTICAL INTEGRATION AND TRADE POLICY: THE CASE OF SUGAR

The degree of vertical integration in the U.S. sugar industry between raw sugar processing and sugar refining cannot be explained using theories of vertical integration based on transaction costs (e.g. Williamson). We graphically decompose the economic rents accruing to each level in the marketing channel. Different strategies of several major sugar producing, processing and refining entities with regard to sugar quota policy are explored.Agribusiness, Industrial Organization,

Distinguishing Hidden Markov Chains

Hidden Markov Chains (HMCs) are commonly used mathematical models of probabilistic systems. They are employed in various fields such as speech recognition, signal processing, and biological sequence analysis. We consider the problem of distinguishing two given HMCs based on an observation sequence that one of the HMCs generates. More precisely, given two HMCs and an observation sequence, a distinguishing algorithm is expected to identify the HMC that generates the observation sequence. Two HMCs are called distinguishable if for every $\varepsilon > 0$ there is a distinguishing algorithm whose error probability is less than $\varepsilon$. We show that one can decide in polynomial time whether two HMCs are distinguishable. Further, we present and analyze two distinguishing algorithms for distinguishable HMCs. The first algorithm makes a decision after processing a fixed number of observations, and it exhibits two-sided error. The second algorithm processes an unbounded number of observations, but the algorithm has only one-sided error. The error probability, for both algorithms, decays exponentially with the number of processed observations. We also provide an algorithm for distinguishing multiple HMCs. Finally, we discuss an application in stochastic runtime verification.Comment: This is the full version of a LICS'16 pape

Natural Disasters and the Yield Curve of Florida Valencias

Crop Production/Industries,