EXCISE TAXES AND COMMODITY PROMOTION: BAYESIAN RETRIEVAL OF THE OPTIMUM

This article shows how the solution to the promotion problem--—the problem of locating the optimal level of advertising in a downstream market--—can be derived simply, empirically, and robustly through the application of some simple calculus and Bayesian econometrics. We derive the complete distribution of the level of promotion that maximizes producer surplus and generate recommendations about patterns as well as levels of expenditure that increase net returns. The theory and methods are applied to quarterly series (1978:2S1988:4) on red meats promotion by the Australian Meat and Live-Stock Corporation. A slightly different pattern of expenditure would have profited lamb producers.Bayesian estimation, commodity promotion as an experiment, distribution of the optimum, Taylor-series expansion, Livestock Production/Industries, Marketing,

Bayesian Ranking and Selection of Fishing Boat Efficiencies

The steadily accumulating literature on technical efficiency in fisheries attests to the importance of efficiency as an indicator of fleet condition and as an object of management concern. In this paper, we extend previous work by presenting a Bayesian hierarchical approach that yields both efficiency estimates and, as a byproduct of the estimation algorithm, probabilistic rankings of the relative technical efficiencies of fishing boats. The estimation algorithm is based on recent advances in Markov Chain Monte Carlo (MCMC) methods—Gibbs sampling, in particular—which have not been widely used in fisheries economics. We apply the method to a sample of 10,865 boat trips in the US Pacific hake (or whiting) fishery during 1987–2003. We uncover systematic differences between efficiency rankings based on sample mean efficiency estimates and those that exploit the full posterior distributions of boat efficiencies to estimate the probability that a given boat has the highest true mean efficiency.Ranking and selection, hierarchical composed-error model, Markov Chain Monte Carlo, Pacific hake fishery, Resource /Energy Economics and Policy, Q2, L5, C1,

Adoption of Certified Organic Production: Evidence from Mexico

Adoption of organic production and subsequent entry into the organic market is examined using Mexican avocado producers as a case study. Probit analysis of a sample of 183 small-scale (<15ha) producers from Michoacán suggests that adoption is positively influenced by management and economic factors (e.g. production costs per hectare and making inputs), but also by social factors (e.g. membership of a producers’ association). Experience in agriculture has a significant but negative effect. Effective policy design must be therefore be aware of both the economic and social complexities surrounding adoption decisions

Bayes Estimates of Time to Organic Certification

The adoption of organic production has increased dramatically over recent years, especially in less developed countries. However, little information is available about who adopts, the difficulties they face in converting and how these factors vary over time. Using small-scale avocado producers (<15ha) from Michoacán, Mexico as a case study, this paper explores the factors affecting the time-to-adoption of organic production and certification, drawing from five parametric descriptions of the data. These models are implemented using a Bayesian approach and advances in Markov chain Monte Carlo methods. The results indicate that additional sources of income, together with membership of producers associations, higher levels of education and experience of export markets, other than the US, have a positive effect on the adoption decision. Labour requirements and administrative capacity appear to be unimportant, while information sources and the frequency of contact with these sources have a varied, but largely negative effect on the probability of adoption. These findings raise a number of questions about the future of organic production in Mexico and the avocado zone, not least how to overcome credit and information constraints, but more importantly whether aiming for the organic market is a viable production strategy for small-scale producers.Crop Production/Industries, Farm Management,

CONDUCT AND VOLATILITY IN FOOD-PRICE DETERMINATION: VAR EVIDENCE FROM TURKISH AGRICULTURE

The relationship between price volatility and competition is examined. A theoretic, vector autoregressions on farm prices of wheat and retail prices of derivatives (flour, bread, pasta, bulgur and cookies) are compared to results from a dynamic, simultaneous-equations model with theory-based farm-to-retail linkages. Analytical results yield insights about numbers of firms and their impacts on demand- and supply-side multipliers, but the applications to Turkish time series (1988:1-1996:12) yield mixed results.conduct, volatility, food marketing., Marketing, Risk and Uncertainty,

Spatial Econometric Issues for Bio-Economic and Land-Use Modeling

We survey the literature on spatial bio-economic and land-use modelling and review thematic developments. Unobserved site-specific heterogeneity is common in almost all of the surveyed works. Heterogeneity appears also to be a significant catalyst engendering significant methodological innovation. To better equip prototypes to adequately incorporate heterogeneity, we consider a smorgasbord of extensions. We highlight some problems arising with their application; provide Bayesian solutions to some; and conjecture solutions for others.spatial econometrics, bio-economic and land-use modelling, Bayesian solution, Land Economics/Use,

An Empirical Analysis of the Effects of Plant Variety Protection Legislation on Innovation and Transferability

Under the TRIPs Agreement, all member-countries of the World Trade Organization are required to provide an "effective" system of plant variety protection within a specific time frame. In many developing countries this has led to a divisive debate about the fundamental desirability of extending intellectual property rights to agriculture. But empirical studies on the economic impacts of PVP, especially its ability to generate large private sector investments in plant breeding and facilitate the transfer of technology, have been very limited. This paper examines two aspects of the international experience of PVP legislation thus far (i) The relationship between legislation, R&D expenditures and PVP grants, i.e., the innovation effect, and (ii) The role of PVP in facilitating the flow of varieties across countries, i.e., the transferability effect.Plant variety protection, biotechnology, technology transfer, Crop Production/Industries,

New Results On Censored Regression with Applications to Transactions Costs, Household Decisions and Food Purchases

We generalize the Tobit censored regression to permit unique unobserved censoring thresholds conditioned by covariates and a set of common response coefficients. This situation , we argue, is one arising frequently in applications of censored regression and we provide three diverse examples to motivate the theory. We derive a robust estimation algorithm with three noteworthy features. First, by augmenting the observed-data likelihood with the censored observations, the estimation strategy is the same as Chib (1992) who derives Bayes estimates of the conventional censored regression. Second, by virtue of its generality, the model is applicable to a much broader set of circumstances than the conventional Tobit regression, which is nested as a special case of the more general framework. Third, despite its generality and wide applicability, the estimation algorithm is very simple, evidencing routine application of Markov chain Monte Carlo methods (MCMC)-Gibbs sampling in particular- and requiring only modest extensions of the basic algorithm in Chib (1992). The model and procedures are illustrated empirically in three applications that we use to motivate the theory, namely problems in transactions-costs economics, household decision-making and food-consumption.conditionally censored Tobit regression, Bayes inference, Food Consumption/Nutrition/Food Safety, O11, C34, O13,

Organic Farming Policies and the Growth of the Organic Sector in Denmark and the UK: A Comparative Analysis

There has been little systematic analysis of the extent to which organic farming policies have influenced growth in the organic sector. Analyses of organic farming policy instruments, for the most part, provide extensive and detailed reviews of instruments applied either in a single country or across countries. Hence, there is a great need to examine systematically whether there is a relationship between the introduction of organic farming policies and the growth of the organic food sector, and whether particular designs of organic farming policies are more effective than others. In this paper, we take the first step in the endeavour of analysing the effects of organic farming by undertaking an econometric analysis of the relationship between organic farming policies in Denmark and the UK and their effects on the number of farmers and growers converting to organic production.organic farming, policy, Agricultural and Food Policy, Farm Management,

BAYES' ESTIMATES OF THE DOUBLE HURDLE MODEL IN THE PRESENCE OF FIXED COSTS

We present a model of market adoption (participation) where the presence of non-negligible fixed costs leads to non-zero censoring of the traditional double-hurdle regression. Fixed costs arise due to household resources that must be devoted a priori to the decision to participate in the market. These costs-usually a cost of time-motivate two-step decision-making and focus attentions on the minimum-efficient scale of operations (the minimum amount of milk sales) at which market entry becomes viable. This focus, in turn, motivates a non-zero-censored Tobit regression estimated through routine application of Markov chain Monte Carlo Methods.market participation, fixed costs, double-hurdle model, censored regression., Financial Economics, O1, O11, C34, O13, Q16, D1,