A DISCUSSION PAPER ON CANADIAN WHEAT BOARD GOVERNANCE

Crop Production/Industries, Institutional and Behavioral Economics,

Consumption effects of genetic modification: what if consumers are right?

This paper develops a model of differentiated consumers to examine the consumption effects of genetic modification (GM) under alternative labeling regimes and segregation enforcement scenarios. Analytical results show that if consumers perceive GM products as being different than their traditional counterparts, genetic modification affects consumer welfare and, thus, consumption decisions. When the existence of market imperfections in one or more stages of the supply chain prevents the transmission of cost savings associated with the new technology to consumers, genetic modification results in welfare losses for consumers. The analysis shows that the relative welfare ranking of the “no labeling” and “mandatory labeling” regimes depends on: (i) the level of consumer aversion to genetic modification, (ii) the size of marketing and segregation costs under mandatory labeling; (iii) the share of the GM product to total production; and (iv) the extent to which GM products are incorrectly labeled as non-GM products.Genetically modified foods Economic aspects., Consumers., Consumption (Economics),

NEW GENERATION CO-OPERATIVES: RESPONDING TO CHANGES IN AGRICULTURE

Agribusiness,

Cognitive Dissonance and Customer Allegiance in a Mixed Oligopoly

The purpose of this article is to examine the effect of cognitive dissonance in a mixed oligopoly where a local cooperative competes with an investor-owned firm (IOF) for the local market. The article explicitly incorporates individuals' beliefs regarding the quality of the two organizations as a choice variable in the utility function and individuals trade off utility from beliefs against utility resulting from their actions. The proposed model considers a case where managerial decisions or the introduction of new products forces consumers to modify their initial beliefs regarding the (superior) quality of their cooperative. Analytical results demonstrate the changes in equilibrium that result from cognitive dissonance.Consumer/Household Economics,

Cooperative Conversions, Failures and Restructurings: An Overview

The cases assembled in this special issue provide a rich setting for an examination of a number of cooperative conversion and restructurings that have occurred over the last 10 years. The cases also provide some lessons on the larger cooperative problems and questions in which cooperative researchers have been interested. The cases suggest that some of the conversions and restructurings are due to what can simply be called poor management, something that is not unique to co-ops, but is in fact common to all business enterprises regardless of their structure. At the same time, the cases also point out that common structural problems associated with cooperatives – such as lack of capital, property right problems and portfolio problems – do have an impact on the structure chosen by cooperatives and their members. Finally, a number of case-study authors point to increasing capital requirements in industrialized agriculture as a significant challenge for cooperatives seeking to integrate along the supply chain.Agribusiness,

Mental Frames and Organizational Decision-making: Facing the Challenges of Change

Adjusting to the strategic, business and economic changes requires efficient decision-making procedures which can in turn be highly affected by the underlying mental frames that the leaders of the organization hold. This article examines the impact of these mental frames on decision-making with respect to a specific attribute of a decision-making process: the belief that a CEO of a co-operative holds regarding member commitment. The analysis develops a simple theoretical model that shows how the co-op CEO’s obsolete mental frame creates distortions on decision making that can have negative effects on co-op’s strategic decisions and its market share. The starting point of the analysis is the case of the Saskatchewan Wheat Pool (SWP) – a Canadian grain handling, agri-food processing and marketing company that had little success in adapting to the changing economic environment of the Canadian agriculture.Industrial Organization,

INNOVATION ACTIVITY IN A MIXED OLIGOPOLY: THE ROLE OF CO-OPERATIVES

This paper develops a sequential game theoretic model of heterogeneous producers to examine the effect of co-operative involvement on innovation activity in the agricultural input-supplying sector. Analytical results show that the co-operative involvement in R&D can be welfare enhancing and, thus, socially desirable. The presence of the co-op can increase the arrival rate of innovations and productivity growth while reducing the prices of agricultural inputs. The effectiveness of the co-op is determined by the size of R&D costs.Agribusiness, Research and Development/Tech Change/Emerging Technologies,

DUAL MARKETING AND THE DECISIONS FACING WESTERN CANADIAN FARMERS FOR WHEAT AND BARLEY MARKETING: A BRIEF TO THE WESTERN GRAIN MARKETING PANEL

Crop Production/Industries, Marketing,

THE ECONOMICS OF DECOUPLED PAYMENTS IN THE PRESENCE OF CHEATING

This paper introduces enforcement costs and farmer misrepresentation into the economic analysis of decoupled area payments. When enforcement is costly, complete deterrence of cheating is never optimal from an economic perspective. Misrepresentation changes the welfare effects of the policy instrument, its transfer efficiency, and the socially optimal income redistribution.Institutional and Behavioral Economics,