Current trends in the structure of hog production in the U.S. are toward facilities that are not only larger, but also more likely to be specialized, carrying out only some of the vertically linked phases of production in the same facility. This paper investigates the cost efficiency incentives for these changes by estimating a multistage cost function for hog production. Data are from the Hog Production Practices and Costs portion of the USDA’s 2004 Agricultural Resource Management Survey.

Several empirical analyses of data from fed cattle markets have found a negative correlation between a region's weekly delivery volume of captive supply cattle and contemporaneous price in the local cash market. This negative correlation has been cited as evidence of a causal relationship between the two variables; a relationship in which buyers (beef packing plants) use captive supply procurement as an instrument to depress prices paid to cash market sellers (feeders). This paper investigates circumstances under which this empirical regularity might emerge as a benign artifact of buyer and seller behavior in a fed cattle market in which both sides are price takers. One feature of these markets is that sellers of both marketing agreement (the predominant captive supply procurement method) cattle and spot market cattle have some flexibility in scheduling delivery in order to take advantage of expected price changes. The effect that this type of inter-temporal arbitrage has on the dynamics of price and captive supply is investigated using simulation methods applied to a rational expectations model of delivery timing incentives.

This note describes and investigates an equilibrium model of a service market in which customers search among many firms for ones offering acceptable combinations of money price and expected waiting time. Although neither firms nor customers possess market power, the noncooperative equilibrium of the model is inefficient: Forcing customers to be more selective in their choices of suppliers can produce Pareto improvements in welfare. This result is due to an externality, in queue accession decisions, which others have identified in related contexts..

Relatively new split-cable scanner data collection methods have facilitated controlled market tests of household responses to food commodity promotion. Analysis of such data from a fresh-beef advertising experiment in Grand Junction, Colorado, showed that although experimental advertising failed to increase the level of demand, it did appear to influence feature-price buying patterns. There was an increase in demand for beef over the advertising period, unrelated to the effects of the experimental advertising itself.

Exports of agricultural commodities to developed countries play a significant role in the economies of many developing countries. The elimination of import tariffs has the potential to benefit producers in the developing countries, but estimates of the effect of trade liberalization typically assume perfect competition. Significant concentration in the food processing and retailing sectors of the U.S. and the EU undermine the plausibility of this assumption in the case of agricultural trade, however. Sexton, Sheldon, McCorriston, and Wang (SSMW, 2007) developed a model of the effects of trade liberalization that accounts for the vertically-linked and concentrated characteristics of the developed countries’ food markets. Their principal qualitative finding is that an analysis based on the assumption of competitive conduct will overstate the effects of trade liberalization if food processing and retailing firms exercise market power. This result is sensitive to their choice of functional forms, however, as this paper demonstrates with an analysis in which SSMW’s linearity assumption is replaced by constant elasticity specifications for supply and demand. We also extend the SSMW analysis by considering ad valorem tariffs, a case for which the results exhibit both qualitative and quantitative differences from those for the unit tariff case.

We conduct custom tests of structural change in a rational addiction model of cigarette demand estimated using a panel of annual time series of state−level data. In contrast to the one previous application of custom tests to the question of cigarette demand stability, our results provide strong evidence of downward shifts in demand during the modern era of health warnings and anti−smoking campaigns.

It has long been recognized that unrestricted exploitation of fish populations inevitably leads to inefficiency.^ At best, the absence of controls brings about fishing effort levels that exceed those at which the marginal cost of a fish equals its value to consumers. At worst, this allocative inefficiency is compounded by a technical inefficiency: A given sustained yield is achieved with higher than necessary expenditures of effort. By suitably restricting fishing activity through an appropriate system of catch taxes, a regulatory body could ensure efficient exploitation of a fish population. The regulatory approaches actually used in practice, however, include technological controls (restrictions on the size, power, and other cliaracteristics of boats; port .turnaround time; or fishing gear) and.limitations on season length or total catch. Each of these regulatory measures is flawed in that it introduces inefficiencies of its own.

Exports of agricultural commodities to developed countries play a significant role in the economies of many developing countries. The elimination of import tariffs has the potential to benefit producers in the developing countries, but estimates of the extent of the gains from trade liberalization typically assume perfect competition. Significant concentration in the food processing and retailing sectors of the U.S. and the EU undermine the plausibility of this assumption in the case of agricultural trade, however. Sexton, Sheldon, McCorriston, and Wang (2007) develop a model of the effects of trade liberalization that accounts for the vertically-linked and concentrated characteristics of the developed countries’ food markets. Their analysis is limited to the case of a constant per unit tariff, however. In this paper, we extend the analysis of the effects of trade liberalization in the presence of downstream market power to the case of an ad alorem tariff, and we find important qualitative differences from the results for the unit tariff case.

In a 1993 paper in the Journal of Industrial Economics, Carey studies the problem of reservation price announcement in sealed bid procurement auctions. Assuming that the auctioneer/monopsonist has a self-supply option and is motivated by the desire to minimize the expected total cost of procurement, she investigates the auctioneer's decision to announce a reservation price and the level at which it should be set. Carey's analysis includes some errors, however. This comment proposes corrections. I begin by describing the auction setting.

This article proposes an oligopsony pricing model for projecting the effects of increased concentration or oligopsonistic coordination in beef packing using simulation methods. The model combines an explicit behavioral theory of packing firms with an attempt to respect the regional scope of cattle procurement markets. Our results indicate less danger of falling cattle prices, as a result of increased packer concentration or coordination, than do results from conventional econometric studies.