Revenue Insurance and Chemical Input Use Rates

Using farm level data and a simultaneous probit model we evaluate the input use and environmental effects of revenue insurance. A priori, the moral hazard effect on input use is indeterminate and this study empirically assesses the input use impact of the increasingly popular, and federally subsidized, risk management instrument of revenue insurance. We conclude that the moral hazard effect of federally subsidized revenue insurance products induces U.S. wheat farmers to increase expenditures on pesticides and reduce expenditures on fertilizers.Crop Production/Industries, Risk and Uncertainty,

AGRICULTURAL POLICY REFORM IN THE WTO: THE ROAD AHEAD

Agricultural trade barriers and producer subsidies inflict real costs, both on the countries that use these policies and on their trade partners. Trade barriers lower demand for trade partners' products, domestic subsidies can induce an oversupply of agricultural products which depresses world prices, and export subsidies create increased competition for producers in other countries. Eliminating global agricultural policy distortions would result in an annual world welfare gain of $56 billion. High protection for agricultural commodities in the form of tariffs continues to be the major factor restricting world trade. In 2000, World Trade Organization (WTO) members continued global negotiations on agricultural policy reform. To help policymakers and others realize what is at stake in the global agricultural negotiations, this report quantifies the costs of global agricultural distortions and the potential benefits of their full elimination. It also analyzes the effects on U.S. and world agriculture if only partial reform is achieved in liberalizing tariffs, tariff-rate quotas (limits on imported goods), domestic support, and export subsidies.Agricultural and Food Policy, International Relations/Trade,

Empirical analysis of the efficiency of job assignment auctions

For some hard-to-fill jobs the Navy awards Assignment Incentive Pay using an auction-like format. With respect to the optimal job assignment auction format, however, there is only a very limited academic literature. Furthermore, the extant literature assumes all bidders are equally qualified. In the Navy assignment context, this is not a tenable assumption, as other considerations, such as relocation and en-route training costs, must be considered when making an assignment. The lower the weight on the bid, the greater the weight that can be attached to the qualification component in the objective function. The lower the weight, however, the weaker the incentive to bid near one's reservation wage. The consideration of such other criteria precludes the implementation of the incentive-compatible, Vickery-Leonard assignment auction. We relax the assumption that bid amounts alone determine the assignment set and experimentally estimate the efficiency reductions associated with decreased bid-weights. The estimated elasticity of the value of the bids to changes in the bid-weight in low contention, first price auctions vary by bid-weight. Nonetheless, an increase from a 10 to a 50% weight on the bids decreases the level of the submitted bids by approximately 28%.

Are Eco-Labels Valuable? Evidence from the Apparel Industry

Using U.S. apparel catalogue data, we estimate hedonic price functions to identify market valuation of environmental attributes of apparel goods. We identify a significant and robust premium for the organic fibers embodied in the apparel goods. We also find a discount for the "no-dye" label. We do not, however, find any evidence of a premium for environment-friendly dyes. We further investigate the pricing behavior of apparel suppliers for potential heterogenous pricing of the organic-fiber attribute and find no evidence of different premia across firms

Revenue Insurance and Chemical Input Use Rates

Using farm level data and a simultaneous probit model we evaluate the input use and environmental effects of revenue insurance. A priori, the moral hazard effect on input use is indeterminate and this study empirically assesses the input use impact of the increasingly popular, and federally subsidized, risk management instrument of revenue insurance. We conclude that the moral hazard effect of federally subsidized revenue insurance products induces U.S. wheat farmers to increase expenditures on pesticides and reduce expenditures on fertilizers

ARE ECO-LABELS VALUABLE? EVIDENCE FROM THE APPAREL INDUSTRY

Using U.S. apparel catalogue data, we estimate hedonic price functions to identify market valuation of environmental attributes of apparel goods. We identify a significant and robust premium for the organic fibers embodied in the apparel goods. We find an additional organic premium for baby items. However, we do not find evidence of a premium for environment-friendly dyes. We further investigate the pricing behavior of apparel suppliers for potential departure from competitive pricing of this environmental attribute and find no evidence different premium across firms, suggesting price-taking behavior in the environmental attribute space

Eco-Labels and International Trade in Textiles

This paper provides a formal analysis of the welfare and trade implications of eco-labeling schemes. A simple model of vertical (quality) differentiation captures major stylized features of the textiles market in which trading takes place between an industrialized North (domestic) and a developing South (foreign). The paper investigates several labeling scenarios (labeling by North, labeling by both North and South, and harmonization). A labeling scheme in the North without the South's participation is detrimental to both the North's and the South's producers of conventional textiles. In aggregate, the North's textiles industry benefits from the introduction of the label. If the South creates its own label, it regains market share in aggregate, but at the cost of its conventional textiles sector; both of North's industries lose. Consumers gain with a wider choice and with higher quality of textile goods. They would favor upward international harmonization of eco-labels towards the higher quality of the North, as long as the South participates in production and provides some cost discipline

RISK MANAGEMENT AND THE ENVIRONMENT: IMPACTS AT THE INTENSIVE AND EXTENSIVE MARGINS

Risk management programs, such as subsidized crop insurance, affect production decisions at both the intensive (input use) and extensive(land use) margins. The production decisions in turn affect the environment. This paper reviews and synthesizes the literature linking risk management policies and environmental outcomes and points to future research needs

RISK MANAGEMENT AND THE ENVIRONMENT: IMPACTS AT THE INTENSIVE AND EXTENSIVE MARGINS

Risk management programs, such as subsidized crop insurance, affect production decisions at both the intensive (input use) and extensive(land use) margins. The production decisions in turn affect the environment. This paper reviews and synthesizes the literature linking risk management policies and environmental outcomes and points to future research needs.Risk and Uncertainty,