DISCUSSION: ASSESSING STRUCTURAL CHANGE IN THE DEMAND FOR FOOD COMMODITIES

Demand and Price Analysis,

Retail-to-Farm Transmission of Generic Advertising Effects

Demand and Price Analysis, Marketing, Q11, Q13,

A Hedonic Metric Approach to Estimating the Demand for Differentiated Products: An Application to Retail Milk Demand

This article introduces the Hedonic Metric (HM) approach as an original method to model the demand for differentiated products. Using this approach, initially we create an n-dimensional hedonic space based on the characteristic information available to consumers. Next, we allocate products into this space and estimate the elasticities using distances. What distinguishes our model from traditional demand models such as Almost Ideal Demand System (AIDS) and Rotterdam Model is the way we link elasticities with product characteristics. Moreover, our model significantly reduces the number of parameters to be estimated, thereby making it possible to estimate large number of differentiated products in a single demand system. We applied our model to estimate the retail demand for fluid milk products. We also compared our results with the Distance Metric (DM) approach of Rojas and Peterson (2008) using the estimation results from traditional models as a benchmark point. Our approach is shown to give superior results and better approximations to original models.Hedonic Metrics, Distance Metrics, Rotterdam Model, Almost Ideal Demand System, Differentiated Products, Milk Demand., Food Security and Poverty, C30, C80, Q11, Q13, Q18,

The Demand for Livestock by the U.S. Meat Processing Industry

This paper studies the demand of domestic and imported livestock by the U.S. meat processing industry. Two types of meats are analyzed: slaughter cattle and hogs. Static and dynamic inverse input demand models are estimated. The static inversed input demand model performed better than the dynamic inversed input demand models. Calculated own price elasticities (flexibilities) and cross price elasticities (flexibilities) indicate that the demand for imported livestock by the meat processing industry is very sensitive to the change in the domestic price for livestock. The demand of domestic slaughter livestock is less sensitive to the change in imported livestock prices.Agribusiness,

Alcoholic Beverages and Cigarettes: Complements or Substitutes? A Pseudo Panel Approach

In this paper, using pseudo panel data we analyze the relation between cigarette and alcoholic beverage consumption within the rational addiction framework. We believe that pseudo panel data approach has many advantages compared to aggregate and panel data models. We found that alcoholic beverages are complements for cigarettes, while it is not the same the other way around. Moreover, we found that alcohol is a gateway for cigarette which further supports our conclusion concerning the reinforcing effect of alcohol consumption on cigarette consumption. We believe that drinking works as a trigger for smoking especially in social settings like bars while it is also possible (although less likely) that people who want to cut cigarette consumption might increase alcohol consumption to cope with resulting stress, which induces an asymmetry in cross price elasticities. However we point out that the complementarity relationship is much stronger and significant. Policy implications for the results are explained and the direction for further research is addressed.cigarette, alcohol, rational addiction, pseudo panel, Demand and Price Analysis,

Meat Demand under Rational Habit Persistence

The objective of this paper is to explore the theoretical implications of a meat demand model with rational habits. To introduce consumption dynamics, habit persistence is used to motivate intertemporally related preferences. The impact of food safety information on meat consumption is systematically analyzed. Important differences between myopic habits and rational habits are outlined.Demand and Price Analysis,

How do Smoking Bans in Bars/Restaurants Affect Alcohol Consumption?

In this study, we employ a rational addiction framework to analyze the effects of smoking bans on alcohol consumption in bars/restaurants. We use pseudo panel data approach which has many advantages compared to panel data. Although cigarettes and alcohol are complements in consumption, our findings suggest that smoking bans in restaurants do not have a significant effect on the restaurant alcohol consumption. It is possible that smoking bans at restaurants cause a decrease in the restaurant alcohol consumption of smokers, but lead to an increase in the restaurant alcohol consumption of nonsmokers. If this is the case, the net effect of smoking bans on overall restaurant alcohol consumption would be zero. These results are just preliminary, and further analyses are required.cigarette, alcohol, smoking ban, rational addiction, pseudo panel, Demand and Price Analysis,

MEASURING THE DEGREE OF OLIGOPSONY POWER IN THE BEEF PACKING INDUSTRY IN THE ABSENCE OF MARKETING INPUT QUANTITY DATA

We develop a model to measure the degree of oligopsony power in the beef packing industry, while accommodating variable proportions technology, that can be estimated with fewer data requirements. In particular, nonspecialized input quantities, which are often not available, are not needed. Through application of the envelope theorem, we show that the relationship between value marginal product and marginal factor cost can be defined over the prices of the nonspecialized inputs rather than their corresponding quantities. When applied to the beef packing industry, we find no evidence of oligopsony power over our 1967-93 sample period.Agribusiness,

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,

A MODEL OF IMPERFECT COMPETITION USING MARGINAL INPUT AND OUTPUT PRICES: APPLICATION TO THE BEEF PACKING INDUSTRY

Based on Diewert's idea that models under competition can be generalized to imperfect competition using marginal prices, we develop a test for imperfect competition in the beef packing industry. Our model is more general and flexible than those depending on empricial estimates of the input supply and output demand elasticities.Agribusiness, Demand and Price Analysis,