Networks and Transaction Costs

Based on the well-known fact that social networks can provide effective mechanisms that help to increase the trust level between two trade partners, we apply a simple game-theoretical framework to derive transaction costs as a high risk of opportunistic behavior in a repeated trade relation determined by the density and size of trading networks. In the empirical part of the paper we apply a two stage procedure to estimate the impact of social network structures on farm’s transaction costs observed for different input and output markets. At a first stage we estimate a multiple input-multiple output stochastic Ray production function to generate relative shadow prices of three inputs and two outputs traded by farms. At a second stage a structural equation system is derived from the first order conditions of farm’s profit maximization to estimate simultaneously the of commodity specific transaction cost functions for all traded farm inputs and outputs. Estimation results based on a sample of 315 Polish farms imply a significant influence of social network structures on farm’s transaction costs. Moreover, estimated transaction costs correspond to a reasonable amount of farm specific shadow prices.Resource /Energy Economics and Policy,

Farm household decisions under various tax policies: Comparative static results and evidence from household data

The study is devoted to the comparative static analysis and econometric estimation of farm household decisions under both standard and agricultural taxes. Accounting for labor market constraints a non-separable model is constructed implying increasing per-unit costs of accessing labor markets. To control for tax-induced adjustments related to labor market imperfections we compare the results to those derived from a separable approach, assuming perfect labor markets. Theoretical results suggest that most tax-induced responses are ambivalent mainly caused by shadow prices effects. Further, tax-induced effects differ between the two model versions. In particular standard taxes may imply production adjustments in the case of non-separability. Thus, income and value-added taxes are no more necessarily superior to agricultural taxes. Econometric analysis using individual household data from Mid-West Poland indicates remarkable responses to market surplus and input taxes. In contrast, standard and land taxes imply only negligible production adjustments. Thus, they seem to be superior, at least in the Polish case. --

FARM HOUSEHOLD DECISIONS UNDER VARIOUS TAX POLICIES: COMPARATIVE STATIC RESULTS AND EVIDENCE FROM HOUSEHOLD DATA

The study is devoted to the comparative static analysis and econometric estimation of farm household decisions under both standard and agricultural taxes. Accounting for labor market constraints a non-separable model is constructed implying increasing per-unit costs of accessing labor markets. To control for tax-induced adjustments related to labor market imperfections we compare the results to those derived from a separable approach, assuming perfect labor markets. Theoretical results suggest that most tax-induced responses are ambivalent mainly caused by shadow prices effects. Further, tax-induced effects differ between the two model versions. In particular standard taxes may imply production adjustments in the case of non-separability. Thus, income and value-added taxes are no more necessarily superior to agricultural taxes. Econometric analysis using individual household data from Mid-West Poland indicates remarkable responses to market surplus and input taxes. In contrast, standard and land taxes imply only negligible production adjustments. Thus, they seem to be superior, at least in the Polish case.Agricultural Finance, Consumer/Household Economics,

Agricultural Risk Management - Experiences from an Action Research Approach

A new model for risk management in agriculture is described in the paper. The risk model is constructed as a context dependent process, which includes four main phases. The model is aimed at agricultural advisors, who wish to facilitate and disseminate risk management to farmers. It is developed and tested by an action research approach in an attempt to make risk management more applicable on family farms. Our obtained experiences indicate that farmers don't apply probabilistic thinking and other concepts according to formal decision theory.Risk management, consulting, action research, farm families, Risk and Uncertainty,

Economic Impact of the Mid-Term Review on Agricultural Production, Farm Income and Farm Survival: A Quantitative Analysis for Local Sub-Regions of Schleswig-Holstein in Germany

This study analyzes the impact of the Mid-Term Review (MTR) on the agricultural sector in Schleswig-Holstein, a federal state in Germany. First, a very detailed farm group linear programming model is built to quantify the effects on agricultural production and farm incomes. The production adjustment to the MTR and its impact on farm profit vary significantly between individual farms. These results depend mainly on the farm type and the resource endowments of the farms. Second, the impact on structural change is examined with a farm survival model. Although the MTR clearly reduces the incomes of several farm types, it accelerates the structural change only gradually.policy reform; modeling production adjustment; farm income; structural change

Economic Impact of the Mid-Term Review on Agricultural Production, Farm Income and Farm Survival: A Quantitative Analysis for Local Sub-Regions of Schleswig-Holstein in Germany

This study analyzes the impact of the Mid-Term Review (MTR) on the agricultural sector in Schleswig-Holstein, a federal state in Germany. First, a very detailed farm group linear programming model is built to quantify the effects on agricultural production and farm incomes. The production adjustment to the MTR and its impact on farm profit vary significantly between individual farms. These results depend mainly on the farm type and the resource endowments of the farms. Second, the impact on structural change is examined with a farm survival model. Although the MTR clearly reduces the incomes of several farm types, it accelerates the structural change only gradually.policy reform, modeling production adjustment, farm income, structural change, Community/Rural/Urban Development, Q12, Q18,