Three essays on agriculture economics
The main subjective of this dissertation is to analyze three issues of current interest in agricultural economics. Chapter 1 investigates the lead-lag relationships among soybean prices in U.S., Brazilian, and Chinese futures markets by using threshold co-integration methodologies. The empirical results indicate the influence of U.S. market in the long-term, and also show that overnight return of U.S. soybean futures and the daytime return of Chinese No. 1 soybean futures contemporaneously affect each other in the short-term. A weak temporal seasonal causality between U.S. and Brazilian soybean futures prices exists. Chapter 2 examines the impact of feedstock supply mechanisms under conditions of spatial monopoly on the supply of cellulose to the plants. The model shows that, in the absence of competition, the processor is indifferent between processor collection and supplier delivery, but that societal welfare is higher under supplier delivery. By using a repeated Nash Equilibrium, this paper shows that processor collection is first best for both incumbent and entrant. By comparing the slope of marginal cost curve for this monopsonistic processor with the slope of cost curve across other feedstocks, substantial quantities of other feedstocks may be required to meet the mandate. Chapter 3 investigates a change in the market power of the U.S. nitrogen fertilizer industry by examining the causal linkage between fertilizer, its main feedstock (natural gas), and output (corn) by using a Bayesian-based Kalman filter algorithm. The results of the time-varying estimation show that the U.S. nitrogen fertilizer price follows the value of its marginal productivity closer than its marginal cost of production, indicating a less competitive market structure. The estimation from the error correction model supports these results.