Consumer Price Formation with Demographic Translating

We investigate how to theoretically and empirically incorporate demographic translating in consumer distance functions. Consumer distance functions yield inverse demand systems that are of interest when attempting to better understand questions of price formation. Translating procedures are important when incorporating pre-committed quantities, pre-allocated factors, or demographic variables (e.g., advertising, health or food safety information) in the inverse demand system. Examples are included for illustrative purposes.Consumer/Household Economics,

Measuring Part-Whole Bias: Some Evidence from Crop Biotechnology

We analyze the non-pecuniary aspects of some crop biotechnologies taken from three farm-level surveys. We focus particularly on the phenomen on of part-whole bias, which is the empirical finding that the sum of the stated part-worths (the value of each nonpecuniary characteristic) is greater than the stated total value of all the non-pecuniary characteristics. We analyze the empirical evidence of part-whole bias in the surveys, while decomposing it to further understand the phenomenon and to rescale the stated values of the non-pecuniary characteristics in the surveys. We find for all three surveys that the degree to which part-worths should be rescaled is about 60 percent.Crop Production/Industries, Research and Development/Tech Change/Emerging Technologies,

Price elasticities, joint products, and international trade

This paper extends the basic results of Houck’s insight for derived demand elasticities for the case of joint products by allowing for the possibility of the joint and raw products being traded. Theoretical relationships between individual demands for a set of jointly-produced commodities that are traded and composite demand for the raw product from which the joint products originate are derived. It is shown that while the derived price elasticity of domestic demand retains the same form as Houck’s original formula, the relevant price elasticities of demand to include in the formula are elasticities of total demand instead of domestic demand elasticities. Using the USA soybean industry as an example, this generalised formula that takes into account trade is implemented to calculate the elasticity of total demand for USA soybeans. The usefulness of this formula for policy-makers to trace out the impacts of changes in market conditions and trade policy in the joint-products, and how it will impact the price elasticity of domestic and total demand for the raw product, is demonstrated.Demand and Price Analysis, International Relations/Trade,

Spatial Analysis of Market Linkages in North Carolina Using Threshold Autoregression Models with Variable Transaction Costs

In North Carolina, where soybeans and corn are the two primary crops, the recent increase in the demand for U.S. corn has triggered a shift of farm acreage from soybeans to corn, leading to a rapid rise in prices of both commodities. However, the rate of the price changes, as well as the price level, is significantly different in markets that are located in different parts of the state. This study extends the literature that examines linkages between spatially separated markets by using a threshold autoregressive model with a less restrictive assumption for estimating the transaction cost neutral band -- the band within which trade is not profitable. This generalization allows the neutral band of transactions costs to change according to various external factors, including fuel costs and seasonality. The estimation results indicate that for longer time series data, variable thresholds models statistically outperform the constant thresholds specification, and may provide a better representation of corn and soybean price data. Additionally, impulse response functions that use the asymmetric variable threshold model parameters indicate that the magnitude of the shock as well as the time-to-price-parity-equilibrium in the linked markets may be underestimated if a constant thresholds specification is implemented.threshold autoregression, spatially separated markets, impulse response, neutral band, Demand and Price Analysis, Marketing, Q11, Q13,

The Impacts of Food Safety Information on Meat Demand: A Cross-Commodity Approach Using U.S. Household Data

The potential impacts of a food safety event on consumer demand for meat is of significant concern to producers, packers, processors, retail businesses, and the USDA. This study investigates whether publicized food safety information from the printed media on beef, pork, and poultry, impacts the demand for these commodities. A four commodity complete demand system is employed using monthly household level data on meat purchases collected by the Nielsen Company, with separate food safety indices incorporated for beef, pork, and poultry. Results from the analysis indicate that consumers purchase relatively high levels of pre-committed quantities of pork, chicken, and turkey, while beef consumption appears to be primarily from supernumerary expenditures. The results also indicate that seasonal demand patterns are statistically significant in explaining the quantity of meat and poultry demanded. However, the food safety variables are not jointly statistically significant from zero.Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

Modeling Acreage Response and US Farm Policy In a New Market Environment

Replaced with revised version of poster 9/2/11.Agricultural and Food Policy,

The Impact of Pork Advertising on US Meat Demand in the Presence of Competing Beef Advertising and Food Safety Events

We examine the effects of domestic advertising and promotion expenditures on meat demand, extending previous efforts in several areas, including the use of more recent data, employing a complete demand system and simultaneously measuring the impacts of generic pork and beef advertising and food safety information on the demand for beef, pork, and poultry. Using the Generalized Almost Ideal Demand System (GAIDS), own- and cross- beef and pork advertising and own- and cross- beef, pork, and poultry food safety effects are measured jointly and consistently. To allow for a more complex dynamic response of advertising and food safety effects, the flexible distributed lag technique of Mitchell and Speaker (1986) is employed. The coefficients on pork advertising in the pork and poultry equations are highly significant. The coefficients on beef advertising are only statistically significantly different from zero in the poultry equation indicating the primary impact from these efforts is a cross-commodity effect. To investigate the economic significance of these effects, elasticities for price, expenditure, food safety and advertising are calculated and compared. Consistent with previous work we find the impacts of advertising and food safety effects to be economically small compared with price and expenditure effects.food safety, Generalized Almost Ideal Demand System, generic advertising, meat demand, polynomial inverse lag, Demand and Price Analysis, Food Consumption/Nutrition/Food Safety,

INTERACTION EFFECTS OF PROMOTION, RESEARCH, AND PRICE SUPPORT PROGRAMS FOR U.S. COTTON

Many agricultural commodities have industry-funded generic promotion and/or research ("checkoff") programs designed to improve the economic performance of producers. To determine the effectiveness of these programs, the net benefits to producers attributable to activities funded by the checkoff must be separated from those due to other factors influencing commodity markets. One such factor that is very important in many agricultural commodity markets is the effect of government programs. However, studies evaluating the returns to checkoff programs often do not explicitly discuss the impact of pre-existing distortions caused by federal farm programs. Because the distortions caused by farm programs can be quite large, this omission can lead to seriously biased estimates of the returns to the checkoff programs. In this study, we develop a model that captures the influence of two Federal programs (loan deficiency payments to farmers and subsidies to consuming mills) on the estimated returns to the Cotton Research and Promotion Program. Using an econometrically estimated model of the U.S. cotton market, we find that the program interaction effects have a large impact on checkoff program returns.Agricultural and Food Policy, Crop Production/Industries,

On the Economics of Crop Rotations to Inhibit Corn Rootworm Resistance Development

Corn rootworm resistance to one of the corn rootworm traits has been found in a few isolated places in the Corn Belt. Several crop rotations have been proposed by industry officials and academics to attempt to eliminate or delay this resistance. Three of these rotation schemes are evaluated in this article as to their relative monetary returns, as well as other, non-monetary attributes of the rotations

The Net Gain to Cotton Farmers of a Natural Refuge Plan for Bollgard II[trademark] Cotton

This paper presents an evaluation of the initial potential economic benefit at both the farm-level and to Monsanto Company of a change in refuge policy for Bollgard II[trademark] cotton. The proposed policy change is to eliminate the cotton refuge requirement for Bollgard II cotton in favor of a natural refuge. We first present an evaluative model that is appropriate for any cotton state. We then present an empirical application of the model for North Carolina. We estimate the annual per-acre, farm-level benefit to North Carolina cotton farmers, based on 2005 data as the counterfactual, to be $22.82 and the total farm-level benefit to be$13,037,614 when non-pecuniary benefits are not considered. When non-pecuniary benefits are taken into account, the per-acre benefit is estimated to increase to $26.90 and the total benefit to$15,379,129. The increase in revenue accruing to Monsanto Company is estimated to be $2,427,620.This research was supported by the NC Agricultural Research Service and the Monsanto Company.Includes bibliographical reference