A THEORY OF PACKER SELF PRODUCTION IN THE SWINE INDUSTRY

An analytical model is developed to explain the increasing tendency of pork packers to produce their own hogs. Upstream integration is motivated by recent events including increasing hog buyer consolidation and a need for traceability, but is held in check since it lowers upstream managerial incentives to make non-contractible investments.Livestock Production/Industries,

Estimating the poverty impacts of trade liberalization

As a new round of World Trade Organization negotiations is being launched with greater emphasis on developing country participation, a body of literature is emerging which quantifies how international trade affects the poor in developing countries. In this survey of the literature, the author summarizes and classifies 35 trade and poverty studies into four methodological categories; cross-country regression, partial-equilibrium and cost-of-living analysis, general-equilibrium simulation, and micro-macro synthesis. These categories include a broad range of methodologies in current use. The continuum of approaches is bounded on one end by econometric analysis of household expenditure data, which is the traditional domain of poverty specialists, and sometimes labeled the"bottoms-up"approach. On the other end of the continuum are computable general equilibrium models based on national accounts data, or what might be called the"top-down"approach. Another feature of several recent trade and poverty studies--and one of the primary conclusions to emerge from the October 2000"Conference on Poverty and the International Economy,"sponsored by Globkom and the World Bank--is the recognition that factor markets are perhaps the most important link between trade and poverty, since households tend to be much more specialized in income than they are in consumption. Meanwhile, survet data on the income sources of developing country households has become increasingly available. As a result, this survey gives particular emphasis to the means by which studies address factor market links between trade and poverty. The general conclusion of the author's survey is that any analysis of trade and poverty needs to be informed by both the bottom-up and top-down perspectives. Indeed, recent"two-step"micro-macro studies sequentially link these two types of frameworks, such that general equilibrium mechanisms are incorporated along with detailed household survey information. Another methodology in a similar spirit and also increasingly used involves incorporating large numbers of surveyed households into a general-equilibrium simulation model. Although most of these studies have so far been limitedto a single region, these approaches can be readily adapted for multi-region modeling so that trade and poverty comparisons can be made across countries within a consistent framework.Economic Theory&Research,Labor Policies,Payment Systems&Infrastructure,Environmental Economics&Policies,Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Poverty Assessment,Health Economics&Finance,Inequality

Trade Costs and the Gains from Trade in Crop Agriculture

Forthcoming in the American Journal of Agricultural Economics.geography, grains, trade costs, trade liberalization, Agricultural and Food Policy, Crop Production/Industries, Demand and Price Analysis, International Development, International Relations/Trade, Marketing, Research Methods/ Statistical Methods, Q17, Q54, F18,

Malaria and National Income: Examining a Two Way Causal Relationship

Simple plots of data show that malaria has a negative correlation with national income per capita, whether looking across countries at a point in time, or looking at a single country over time. Some countries have been able to move from an equilibrium characterized by low income and high malaria, to a new equilibrium with higher income and lower rates of malaria. This study develops and estimates a simultaneous equations model to explain these changes. We distinguish three potential causal chains: (a) the ability for decreases in malaria to increase income, (b) the ability for increases in income to reduce malaria (reverse causality), and (c) external factors that may lead to both higher income and lower malaria (incidental association). We find that changes in income have a much stronger effect on malaria than the other way around. While a 1% rise in the number of malaria cases per million decreases income per capita by less than 0.01%, a 1% rise in income per capita decreases the number of malaria cases per million by more than 1.1%. If income were just 1% higher in the 100 countries of the sample, 603,189 cases of malaria could be averted annually.antipoverty, GDP, health, economic growth, malaria, simultaneous equations, Health Economics and Policy, International Development, Labor and Human Capital, I1, I3, O1, O2,

Predicting the poverty impacts of trade reform

An important area of research in recent years involves assessing the microeconomic implications of macro-level policies-particularly those related to international trade. While a wide range of research methodologies are available for assessing the microeconomic incidence of micro-policies, as well as for assessing the effect of macro-level policies on markets and broad groups of households, there is a gap when it comes to eliciting the disaggregated household and firm level effects of trade policies. Recent research addresses this knowledge gap and the present survey offers an overview of this literature. The preponderance of the evidence from the studies encompassed by this survey points to the dominance of earnings-side effects over consumption-side effects of trade reform. This is problematic, since household surveys are notable for their underreporting of income. From the perspective of the poor, it is the market for unskilled labor that is most important. The poverty effects of trade policy often hinge crucially on how well the increased demand for labor in one part of the economy is transmitted to the rest of the economy by way of increased wages, increased employment, or both. Further econometric research aimed at discriminating between competing factor mobility hypotheses is urgently needed.Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Labor Policies,Payment Systems&Infrastructure,Environmental Economics&Policies,Economic Theory&Research,Poverty Assessment,Achieving Shared Growth,Health Economics&Finance

MARKET CONDUCT IN THE U.S. READY-TO-EAT CEREAL INDUSTRY

The FTC's "shared monopoly" case was the focus of U.S. antitrust activity during the late 1970s, but prosecution of the cereal industry was terminated in 1981. We estimate the degree of market power in the industry, and find an increase in multilateral power after 1981.Marketing,

Evidence on Imperfect Competition and Strategic Trade Theory

Strategic trade theory shows that government intervention in markets with small numbers of traders can boost the welfare of a country relative to free trade. This survey critically assesses the empirical evidence regarding this possibility. One finding is that while many international food and agricultural markets are characterized by oligopoly, price-cost markups tend to be small, and the potential gains from intervention are modest at best. In turn, existing government interventions such as agricultural export subsidies are generally not optimal in a strategic trade sense. The evidence suggests that oligopoly by itself is not a sufficient rationale for deviating from free trade in international markets.

The Impact of Trade Costs on Firm Entry, Exporting, and Survival in Korea

This study uses a unique firm-level dataset to examine how falling trade costs from 1993-2001 affected entry, exit, productivity, and exporting in the Korean manufacturing sector. We verify many of the predictions of recent heterogeneous-firm models of international trade. For example, falling trade costs reduced entry by new Korean firms, increased their probability of exit, and reduced the market share of surviving firms. We also find that small firms had a particularly high level of dynamism over the sample period. Small firms were more likely to enter and exit, and marginally more likely to gain market share, enter export markets for the first time, and improve their productivity.Employment, Exit, Exports, Firm deaths, Survival, Trade costs, Agribusiness, Industrial Organization, International Development, International Relations/Trade, Labor and Human Capital, Marketing, Production Economics, Productivity Analysis, Research and Development/Tech Change/Emerging Technologies, F10, D24,

INCORPORATING COMMODITY STOCKHOLDING BEHAVIOR INTO A SHORT-RUN GENERAL EQUILIBRIUM MODEL OF THE GLOBAL ECONOMY

This paper incorporates commodity stockholding into a short run, stochastic global general equilibrium model. A mix of econometric and calibration techniques are used to reconcile model outcomes with historical stockholding and price behavior. The resulting framework is useful for analyzing policies in the short run or presence of production variability.Agribusiness,