Outstanding Master's Thesis Award: Estimation of Elasticities of Demand for Imported Meat in Russia, by Alexi Soshnin; Master's Thesis Award of Merit: Effective Rural Development Strategies: a Framework for Optimizing Community-Business Matches, by Michael Buescher; Master's Thesis Award of Merit: Sustaining the Atlantic Sea-Scallop Fishery: Viability in a Restricted Industry, by Michael Keith Price; Master's Thesis Award of Merit: Food Demand in China: A Case of Guangdong Province, by Xiaobo Zhang; Journal Article of the Year for 1998: Modeling Fresh Tomato Marketing Margins: Econometrics and Neural Networks, by Timothy J. Richards, Paul M. Patterson, and Pieter Van Ispelen; Distinguished Member Award: Linda K. LeeTeaching/Communication/Extension/Profession,

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Research Papers in Economics

NAREA Awards
Outstanding Master’s Thesis Award
Estimation of Elasticities of Demand for Imported
Meat in Russia
AIexi Soshnin
Cornell University
Advisor: Harry de Gorter
This thesis provides estimates of elasticities of demand
for imported meat in Russia. Demand elasticities are a
necessary input for analysis of trade and welfare poli-
cies, but they have not been available. Applied econo-
metric work with data from Russia’s transitory economy
has two challenges: potential complexity of models and
limited data. Thus, it was necessary to find a flexible
functional form for a demand system and reasonable
restrictions to reduce the number of estimated parameters.
The model should be flexible enough to take into ac-
count possible differences in trade between Russia and
Western exporters on the one side and between Russia
and its former CMEA ptiners on the other. Since meat
is known to be a non-homogeneous product, the model
also accommodates possible substitution effects among
different kinds of meat. The popular Armington trade
model allows for source-differentiation, but it assumes
weak separability both between kinds of products and
between sources of imports. Thus, the Armington speci-
fication is rejected in favor of a more flexible AIDS
model. A model developed by Yang and Koo allows for
direct price effects between groups of products and be-
tween different imports within each group. However,
some restrictions, used by Yang and Koo, cannot be
justified by economic theory. This thesis suggests an
improved formulation of Yang and Koo’s source-differ-
entiated AIDS model, and to the degree possible, the
models are subjected to misspecification tests.
The model of Russia’s demand for imported meat is
estimated for three kinds of meat (beef, pork and
chicken) and at three different levels of aggregation over
sources of imports. First, meat products are aggregated
over all sources. Second, western exporters are separated
from the former CMEA members. Third, western and
CMEA exporters are further disaggregated in order to
take into account dominant positions of some exporters.
Based on the empirical results, the most disaggregated
third model appears to be superior to the other altern-
atives.
Tests for weak separability between kinds of products
and between sources of import reject the assumption of
weak-separability. Estimates of elasticities have reason-
able signs and magnitudes. Estimates of expenditure
elasticities for western exporters are significant and
greater than unity. The same estimates for the former
CMEA members are close to zero or negative. This clas-
sifies western meat imports as luxury goods and those
from the former CMEA countries, as necessities or in-
ferior goods. All own-price elasticities are either nega-
tive or not significantly different from zero. Cross-price
elasticities suggest that U.S. and European exporters are
competitors in the Russian market. The model also has
some negative cross-price elasticities which are difficult
to justify.
While more research is needed, this study suggests a
new methodology for reducing the number of estimated
parameters in a source-differentiated AIDS model. This
thesis also provides first estimates of elasticities of de-
mand for imported meat in Russia, and can serve as a
useful benchmmk for other studies.Agricultural and Re$ourceEconomics Review 240 October 1999
Master’s Thesis Award of Merit
Effective Rural Development Strategies:
a Framework for Optimizing
Community-Business Matches
Michael Buescher
University of Vermont
Advisors: Catharine Chan Halbrendt and
Pauline Sullivan
States, cities, and small towns spend billions of dollars
every year on economic development activities. These ac-
tivities include generous public subsidies for businesses
that wish to locate a manufacturing facility in their region.
But whether these practices are effective is far tlom clear.
Planners and public officials often try to maximize the
effectiveness of development spending by targeting one
or a few key sectors. But when these sectors are identi-
fied by a few political or business leaders, with little
input from community residents, the sustainability of
these efforts is questionable at best. At worst, there can
be significant negative effects on the social and environ-
mental fabric of rural places.
Several models exist that can help identify sectors for
targeted economic development, including location quo-
tients, shift-share analysis, and input-output models.
None of these incorporate non-economic considerations,
such as the social and environmental impacts of devel-
opment. Models which do incorporate non-economic
concerns often lack rigor and fail to acknowledge that
tradeoffs are sometimes necessary between, for example,
economic and environmental goals. The need for a
model incorporating all of these pieces is clear.
The Community-Business Matching Project (CBM)
presented here is a step toward the creation of a more
sound methodology for identifying appropriate eco-
nomic development opportunities for rural communities
and small towns. The objective of CBM is to help rural
communities identify their goals for economic develop-
ment, the assets that will help them achieve those goals,
and the types of businesses that will be most likely to
meet those goals. CBM is based on two measures: De-
sirability measures how likely a business is to meet com-
munity goals, and Compatibility measures how likely the
business is to locate in the community. These two mea-
sures are used to develop short term and long term eco-
nomic development strategies.
This thesis describes CBM and its application to a
pilot project in the Town of Richmond, Vermont, where
the Richmond Land Trust is seeking to identify busi-
nesses that might wish to locate in the historic Monitor
Barns. This pilot case shows that CBM can be an im-
portant part of a rural community’s economic develop-
ment strategy. Community goals for economic develop-
ment can be measured, and these measurements can be
used to distinguish sectors that are the most promising
for economic development.
The results of the pilot study suggest that the Rich-
mond Land Trust should consider forest products sectors
as well as agricultural sectors. Suggestions are made for
ways to improve the match between the Land Trust and
businesses in selected sectors. These results are statisti-
cally significant, and also “make sense” in the context of
the site itself. While CBM can not take into account all
of the cultural and historical implications of the pilot
case, its wealth of information for both short term and
long term planning can make it an integral part of a
larger development plan.241 IVAREAAwards
Master’s Thesis Award of Merit
Sustaining the Atlantic Sea-Scallop Fishery: Viability
in a Rest~icted Industry
Michael Keith Price
Rutgers University
Advisor: Peter J. Parks
This thesis develops a framework to measure elasticities
of substitution in the limited access Atlantic sea-scallop
(Placopecten magellanicus) fishery. A normalized, re-
stricted quadratic profit function is developed to reflect
historical patterns of fishing effort. The thesis represents
the completion of the first part of an ongoing project to
measure the net economic impacts of various capital
consolidation and/or leasing options currently under
consideration for the fishery. Consolidation and /or leas-
ing may provide the only means to sustain the economic
viability of the fishery under the proposed schedule for
Days-At-Sea reductions mandated by the Sustainable
Fisheries Act. Estimates of own- and cross-price elastic-
ities and Diewert’s notion of elasticities of intensity have
shown that input substitution possibilities in the fishery
Master’s Thesis Award of Merit
Food Demand in China: A
Guangdong Province
Xiaobo Zhang
Cornell University
Advisor: Timothy Mount
China has been one of the fastest growing countries for
the past two decades. Rapidly rising incomes bring about
more demand for grains, other food and other products.
Over the last several years, China has shifted from being
a net exporter of grain to a net importer. h an integrated
world market, China’s dependence on grain imports
could affect the world grain market and the United States
as the World’s largest grain exporter. Despite the impor-
tance of this issue, there is little agreement in the litera-
ture on the size of the price and income elasticities of
demand for grain in China. Most recent studies of Chi-
na’s food demand use either cross-section or time series
data. In general, the time series data lead to the conclu-
sion that food grain is an inferior good with a negative
are limited. It is apparent that industrial re-organization
alone can not preserve the economic basis of the fishery
under the proposed reductions in effort.
Mathematical models of vessel viability are designed
to identify and estimate break-even and profit maximiz-
ing input vectors. The viability models incorporate func-
tioned representations of returns to fishing effort, vessel
fixed cost schedules, and market transactions of days-at-
sea. The calibrated model will provide the foundation for
policy simulations to derive the net economic impacts of
various days-at-sea reduction and consolidation sched-
ules. The results of these simulations will enable policy
makers to evaluate and develop policies that are at the
same time economically, biologically and environmen-
tally sustainable.
Case of
income elasticity. In contrast, the analyses based on
cross-section data show that the expenditure elasticities
for food grain are positive. These results are consistent
with other studies which show that cross-sectional expen-
diture elasticities for food grain are significantly higher
than time-series in developing countries.
To reconcile the conflict between the cross-section
and time-series analyses, a panel dataset at a county level
from 1986 to 1995 is used for this study. The counties
are in Guangdong Province which is the fastest growing
region in China, and thus perhaps the best example of
how changes in market reform may affect China’s fu-
ture. This study provides a foundation for understanding
China’s food demand in the future.242 October 1999
A Complete demand system is constructed to estimate
price and expenditure elasticities for food grain, meat, veg-
etable, fish, other-food and other goods (non-food) and
across regions withh the province. TMs system is in sharp
contrast to previous studies in which elasticities are only
evaluated at the grand sample mean. A Vector Auto Re-
gression (VAR) is incorporated into an Almost Ideal De-
mand System to eliminate serial correlation problems.
The model shows that food grain has not become an
inferior good in Guangdong Province although it is be-
Journal Article of the Year for 1998
Agricultural and Resource Economics Review
coming more income inelastic, especially in the more
economically advanced delta area. The expenditure elas-
ticities for meat and fish are much higher than for grain
and vegetables. As a result, growth in the demand for
feed grain will dominate the demand for grain and put
pressure on the domestic grain supply. Since food grains
are not inferior goods, the observed lack of growth in per
capita consumption during a period of high income
growth is due primarily to the increasing availability of
inexpensive food substitutes for grain.
Modeling Fresh Tomato Marketing
Econometrics and Neural Networks
Margins:
Timothy J. Richards, Paul M. Patterson, and Pieter Van Ispelen
This study compares two methods of estimating a reduced misspecification tests reject both linearity and log-linesrity.
form model of fresh tomato marketing margins an econ- This nonlinearity suggests that an inherently nonlinear
ometric and an artificial neural network (ANN) approach. method, such as a neural network, may be of some value.
Model performance is evaluated by comparing out-of- The neural network is able to forecast with approximately
sample forecasts for the period of January 1992 to Decem- half the mean square error or the econometric model, but
ber 1994. Parameter estimates using the econometric both are equally adept at predicting turning points in the
model fail to reject a dynamic, imperfectly competitive, time series.
uncertain relative price spread margin specification, but
Distinguished Member Award
Linda K. Lee
University of Connecticut
Dr. Linda K. Lee is recognized as a Distinguished Mem-
ber of NAREA for her outstanding record as editor of the
Agricultural and Resource Economics Review (ARER)
and for her teaching, research, and extension efforts. As
editor of ARER, she continued the tradition of excel-
lence of her predecessors by soliciting quality papers,
increasing both submissions of manuscripts and new
subscriptions, designing and implementing two special
theme issues, and solidifying the national reputation of
the review.
Dr. Lee has made significant and sustained contributions
through teaching, research, and extension to the Northeast-
ern Agricultural and Resource Economics Association and
the agricultural economics profession. The Association is
pleased to recognize Dr. Linda K. Lee’s contributions by
awarding her the NAREA Distinguished Member Award.

NAREA AWARDS

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