TRANSACTION COSTS, ECONOMIC INSTRUMENTS AND ENVIRONMENTAL POLICIES

This study has attempted to distinguish the alternative forms of transaction costs referred to the environmental policy literature and to bring these transaction costs into a unified theory. The optimal choice of economic instrument between Pigouvian taxes and tradable permits is shown to depend on the level of transaction costs as opposed to the standard model where both emission taxes and permits are first best policies to achieve a level of emissions. It is demonstrated that inclusion of transaction costs decreases the socially optimal emission level as compared to the standard model. Instrument selection is affected by the functional specification for instrument costs for both firm and regulator level. Depending on the nature of these costs optimal economic instruments will be different.Transaction Costs, Economic Instrument Selection, Environmental Economics and Policy, Industrial Organization,

Environmental Regulations and Livestock Production Levels: What is the Direction of Causality?

Fundamental to the assertion that environmental regulatory standards are strategically set by decentralized authorities and consequently firms respond to spatial differences in regulatory standards is the underline causal relationship. Establishing the cause-effect association between regulatory standard setting and industry response is essential to justify the existence of the pollution haven and the potential for a race to the bottom. In this paper using 25 years data of the livestock production intensities for hog, dairy and fed cattle sectors and environmental regulatory stringency measure from 1975 to 2000 for 48 contiguous states we explore whether the direction of causality as suggested by race to the bottom hypothesis is in fact supported by the empirical evidence and hence the potential for existence of pollution haven is real in the U.S. livestock production sector. The results in general support the existence of pollution havens and potential for a race to the bottom at the regional level. There were no convincing evidences supporting the reserve causality that the "industry driving policy" hypothesis. Across the different livestock types, dairy sector provided conclusive evidence that in the regions with substantial growth of dairy inventories, there are strong evidences for a race to the bottom.Environmental Economics and Policy,

Spatial Dynamics of the Livestock Sector in the United States: Do Environmental Regulations Matter?

This study examines the factors affecting state annual share of national inventory for each of the hog, dairy, and fed-cattle sectors using data from the 48 contiguous states for 1976 to 2000. The paper develops a state specific, time-series environmental stringency measure and introduces instrumental variables to control for the possible endogeneity bias between livestock production decisions and regulatory stringency. The results indicate that differences in the severity of environmental regulations facing livestock producers have had a significant influence on production decisions in the dairy, and particularly the hog sector.environmental regulation stringency, fixed-effects model, instrumental variable, livestock production, location choice, panel data analysis, pollution havens, Environmental Economics and Policy,

An Analysis of Financing Innovation and Commercialization in Canada's Functional Food and Nutraceutical Sector

Growing consumer interest in functional foods and nutraceuticals has been seen as a significant business opportunity for the agri-food sector. Many of the new firms in this sector are small and medium sized enterprises (SMEs). These SMEs often face difficulties in obtaining financing for their functional food and nutraceutical innovation activities. We develop and implement two models to show what factors affect a firm's decision to seek external financing and the level of financing obtained. Firm size, being privately held and engaging in contractual arrangements, have negative impacts on the likelihood of a firm seeking external funding, while firms which are intensively involved in the functional food and nutraceutical sector, with greater prospects for business expansion and/or are involved in partnerships are more likely to seek external financing. Larger firms and those involved in functional food and nutraceutical research and development receive a greater amount of capital when they decided to raise capital. However, firms focused on functional foods and nutraceuticals, as opposed to more diversified firms, and those involved in product development and concept scale-up receive less capital. Our findings highlight the importance of public support in addressing the capital requirements of functional food and nutraceutical firms and underscore the considerable burden in this respect borne by smaller sized firms.Agribusiness,

THE LOCATIONAL DETERMINANTS OF LARGE LIVESTOCK OPERATIONS: EVIDENCE FROM THE U.S. HOG, DAIRY, AND FED-CATTLE SECTORS

Although differences in environmental stringency have been given as a reason for the growth of the livestock sectors, particularly hogs, in non-traditional production regions, there is little empirical evidence to support the existence of pollution havens. This paper uses the number of large farm as the dependent variable instead of state-level inventory data and also develops an environmental regulatory stringency measure for each state over approximately a decade and carries out a rigorous panel data analysis. After controlling for all other important location determinants, we find that stringent environmental regulations are one of the most important repellents of large hog farms in the United States

TRANSACTION COSTS, ECONOMIC INSTRUMENTS AND ENVIRONMENTAL POLICIES

This study has attempted to distinguish the alternative forms of transaction costs referred to the environmental policy literature and to bring these transaction costs into a unified theory. The optimal choice of economic instrument between Pigouvian taxes and tradable permits is shown to depend on the level of transaction costs as opposed to the standard model where both emission taxes and permits are first best policies to achieve a level of emissions. It is demonstrated that inclusion of transaction costs decreases the socially optimal emission level as compared to the standard model. Instrument selection is affected by the functional specification for instrument costs for both firm and regulator level. Depending on the nature of these costs optimal economic instruments will be different

VERTICAL COORDINATION CHANGES IN THE SRI LANKAN TEA INDUSTRY:TRANSACTION, MANAGEMENT, AND PRODUCTION COSTS

This study examines the effect of changes in production, management, and transaction costs on the change from vertically integrated units to small farmers selling to independent processors in the Sri Lankan tea sector. The results indicate the shift from "make" to "buy" has been affected by the changes in relative costs

Peasants and plantations in the Sri Lankan tea sector: causes of the change in their relative viability

In contrast to the increasing trend in farm size found in most agricultural sectors, the absolute number of producers and relative share of total production from small farms growing green leaf tea in Sri Lanka have increased significantly over time. The boom in peasant production and the corresponding decline in plantations are due to the same general drivers explaining the increase in farm size elsewhere. Government programs and price effects that reduced revenue uncertainty and relative costs of production have enhanced the competitive position of small farmers relative to large estates

THE LOCATIONAL DETERMINANTS OF LARGE LIVESTOCK OPERATIONS: EVIDENCE FROM THE U.S. HOG, DAIRY, AND FED-CATTLE SECTORS

Although differences in environmental stringency have been given as a reason for the growth of the livestock sectors, particularly hogs, in non-traditional production regions, there is little empirical evidence to support the existence of pollution havens. This paper uses the number of large farm as the dependent variable instead of state-level inventory data and also develops an environmental regulatory stringency measure for each state over approximately a decade and carries out a rigorous panel data analysis. After controlling for all other important location determinants, we find that stringent environmental regulations are one of the most important repellents of large hog farms in the United States.Livestock Production/Industries,