European Review of Agricultural Economics - recent issues

Who leaves after entering the primary sector? Evidence from Swedish micro-level data

Gullstrand, J., Tezic, K. — 2008-04-09

Using 14 waves of panel data, this paper investigates why employees entering the primary sector exit subsequently. Transition probabilities are explained by a rich set of individual, regional and sectoral characteristics and a discrete-time competing risks model with unrestricted base-line hazards is used to distinguish between exits into a job in other sectors and other exits. The results confirm Jovanovic's suggestion of ‘survival of the fittest matches’ as workers and firms learn more about the quality of the match between them. It is found that agricultural education, higher income and sector wage differences are the main determinants of the hazard of moving to another sector, whereas marriage and higher education lower the hazard of leaving for non-employment.

My favourite is not on the shelf: effects of the revealed-preference bundle on consumers' stated choice

Hu, W. — 2008-04-09

Based on a conjoint choice experiment relating to canola oil in Japan, this article establishes and tests the impacts of various measures of reference dependence on choice. Results show that although reference dependence may be defined within choice tasks as a type of choice complexity, a broader and more logical definition should be based on respondents' revealed-preference bundle. This broader definition allows for a richer representation and interpretation of behaviour. It is found that references may affect choices through different channels and that many of these effects are non-linear.

Implications of biotech traits with segregation costs and market segments: the case of Roundup Ready(R) Wheat

Wilson, W. W., DeVuyst, E. A., Taylor, R. D., Koo, W. W., Dahl, B. L. — 2008-04-09

Roundup Ready^® Wheat (RRW) is one of the first genetically modified (GM) traits for the wheat sector. We develop a spatial partial equilibrium model of the higher-protein hard wheat market and assess the changes in the distribution of welfare associated with release and adoption of RRW. It incorporates segments for GM aversion in each market and segregation costs for each segment. In the most likely scenario, producer and consumer welfare increases by $301 and $252 million, respectively. Producers of hard red spring wheat in the US and Canada gain. There are welfare losses to hard red winter wheat growers in the US and to EU consumers who have to import at a higher cost.

Investment with weak contract enforcement: evidence from Hungary during transition

Cungu, A., Gow, H., Swinnen, J. F. M., Vranken, L. — 2008-04-09

This paper aims to provide empirical evidence relating to the importance of contract enforcement for development. Survey data on Hungarian farms are used to estimate the impact of contract hold-ups on investment. We find that investment is affected by a variety of factors. Contract breaches in the form of delayed payments have a non-linear effect on investment: at high levels, they significantly deter the investment, but not at low levels.

Household food consumption in Turkey: a comment

Drichoutis, A. C., Klonaris, S., Lazaridis, P., Nayga, R. M. — 2008-04-09

We comment on a recent important article by Akbay et al. and discuss some methodological and estimation issues arising from their paper. We then suggest alternative procedures that may help improve their estimates and thereby enhance their usefulness as a basis for food policy and marketing decisions.

Household food consumption in Turkey: a reply

Akbay, C., Boz, I., Chern, Wen. S. — 2008-04-09

We reply to the Comment by Drichoutis et al. regarding some methodological and estimation issues arising from our paper. In particular, we compare the elasticities reported in the original paper with those obtained using estimation procedures suggested by Drichoutis et al. We find that the differences are very small.

Agricultural Trade Liberalization and the Least Developed Countries

Revoredo-Giha, C. L. — 2008-04-09

The Asymmetries of Globalization

Petit, M. — 2008-04-09

Poverty & the WTO. Impacts of the Doha Development Agenda

Koester, U. — 2008-04-09

Reforming Agricultural Trade for Developing Countries

Grethe, H. — 2008-04-09

The World Food Economy

von Witzke, H. — 2008-04-09

Disciplining exporting state trading enterprises under economies of scale and oligopoly

Scoppola, M. — 2007-12-14

The paper develops a two-stage duopoly model to investigate the effects of eliminating subsidies to state trading enterprises (STEs) as discussed in the WTO Doha Development Agenda negotiations on agriculture. Unlike the STE, the private firm may choose to integrate vertically in order to avoid transaction costs arising from dealing with downstream operators. The theoretical model shows that eliminating subsidies to the STE may induce a change in market structure and not necessarily lead to increased competition. In fact, if transaction costs are large enough relative to fixed costs, then the result may be a monopoly by the private firm.

The impact of increasing non-agricultural market access on EU demand for imported fish: implications for Lake Victoria chilled fillet exports

Muhammad, A. — 2007-12-14

Import demand functions for origin-specific chilled fish fillets to the EU using a Rotterdam-type production model are estimated. Results are used to project the impact of the EU expanding market access to non-African countries. The preference erosion argument suggests that the lower tariffs will erode the competitive position of African countries; however, when the total impact of prices is considered, expanding preferential access may result in increased imports from African countries. If tariffs are reduced to zero, the total EU imports are projected to increase by 4.1 per cent resulting in a 2.2 per cent increase in chilled fillet imports from Lake Victoria.

Farm bankruptcy risk as a link between direct payments and agricultural investment

Vercammen, J. — 2007-12-14

The European Union is increasingly relying on direct payments to support farm incomes. Recent research has shown that a direct payment may increase production and investment by risk-averse farmers via a link between wealth, risk aversion and decision making. This paper shows that, even in the absence of risk aversion, a direct payment may stimulate farm investment. With lenders using a standard insolvency rule for determining bankruptcy, the direct payment raises the expected value of marginal investment because it reduces the risk of bankruptcy over the farmer's operating time horizon. The investment response to the direct payment is larger for a farmer with an intermediate versus low or high level of equity, and for a farmer with a long versus short-time horizon.

Ambiguity of measured WTP for quality improvements when quantity is unconstrained: a note

Corsi, A. — 2007-12-14

This paper addresses the issue of how to estimate by contingent valuation methods the maximum price consumers are willing to pay when a new quality is available for a market good for which quantity adjustments are possible. We argue that current practice, which typically does not specify a quantity when asking consumers the price they are willing to pay for a new quality product, fails to identify prospective consumers' behaviour when they are free to adjust the quantity purchased. Theoretical models are discussed for assessing the maximum price consumers are willing to pay in these cases, and econometric approaches to address these situations are discussed.

Capturing structural changes in French meat and fish demand over the period 1991 2002

Allais, O., Nichele, V. — 2007-12-14

A time-varying coefficient demand system, the Markov switching almost ideal demand model, is proposed to shed new light on change over time in the structure of French meat and fish demand. The main feature of this model is that the switching mechanism from one structure of demand to the other is controlled by an unobserved variable that follows a Markov chain. Our model accurately captures the two Bovine Spongiform Encephalopathy (BSE) crises of recent years. We estimate that the 1996 BSE crisis lasted almost three years, whereas the second BSE crisis for just lasted five 4-week periods.

Global Biopiracy: Patents, Plants, and Indigenous Knowledge

Epps, T. — 2007-12-14

Vertical Markets and Cooperative Hierarchies: The Role of Cooperatives in the Agri-Food Industry

Colman, D., Ruben, R. — 2007-12-14

Econometrics, Statistics and Computational Approaches in Food and Health Sciences

Burrell, A. — 2007-12-14

From the Corn Laws to Free Trade. Interests, Ideas, and Institutions in Historical Perspective

Myrdal, J. — 2007-12-14

Economics of Pesticide Reduction and Biological Control in Field Vegetables A Cross Country Comparison

Wossink, A. — 2007-12-14

List of referees

2007-12-14

Local compensation payments for agri-environmental externalities: a panel data analysis of bargaining outcomes

Hackl, F., Halla, M., Pruckner, G. J. — 2007-10-09

We analyse local compensation payments made to farmers for providing landscape amenities in Alpine tourist communities. These payments result from political bargaining at the municipal level. Panel data estimation shows that the probability of introducing compensation payments depends positively on the benefits of landscape amenities. Although no impact of service provision cost is found, transaction costs at different levels of the bargaining process reduce the probability of payments. Compensation payments mainly occur in communities where the provision of agricultural landscape services is perceived as relatively low and the diversity of the countryside seems to be endangered. We argue that municipal compensation payments are an important supplement to national and European Union policy measures in support of less-favoured areas.

Consumer willingness to pay for farm animal welfare: mobile abattoirs versus transportation to slaughter

Carlsson, F., Frykblom, P., Lagerkvist, C. J. — 2007-10-09

Consumer preferences and willingness-to-pay (WTP) for certain non-market food process attributes were investigated using a choice experiment. Swedish consumers were found to be willing to pay a price premium for the use of mobile abattoirs for cattle but not for broilers. We used two different survey versions, with and without an opt-out alternative. There is no evidence that omission of the opt-out alternative leads to biased choices. In addition, respondents who chose to opt-out were no different from those making trade-offs between attributes. The inclusion of an opt-out alternative has no significant effect on the marginal WTP. Based on estimated distributions of WTP and available cost estimates, the market share for mobile abattoirs is predicted. Here we do find differences between the two survey versions: the version with an opt-out alternative revealed greater unobserved heterogeneity.

Extrapolating experimental-auction results using a stated choice survey

Alfnes, F., Rickertsen, K. — 2007-10-09

During the last decade, experimental auctions and stated choice (SC) surveys have been widely used to study food demand. These methods have complementary strengths and weaknesses. Experimental auctions are limited by the availability of products and the use of locally recruited participants, whereas SC surveys lack real economic incentives. We use an SC survey to extrapolate the results of an experimental auction to hypothetical products with non-existing attribute combinations and to a representative sample of Norwegian consumers. The method is illustrated using Norwegian consumers' preferences for country-of-origin and hormone status for beef.

Strategic response to GMOs by GM-free countries

Veyssiere, L. — 2007-10-09

This article examines the dilemma of a large exporting country of an agricultural product that has to determine whether or not to approve genetically modified (GM) products with or without a labelling regime. We derive two main results. First, the approval decision on GM products is specific to the labelling regime: approval of GM products is optimal under a labelling regime, whereas non-approval is optimal in the absence of a mandatory labelling requirement. Second, the inability to protect the innovator's rent through IPR enforcement can prevent the approval of GM products.

Estimating technical efficiency under unobserved heterogeneity with stochastic frontier models: application to northern German dairy farms

Abdulai, A., Tietje, H. — 2007-10-09

This article uses panel data estimation techniques to examine technical efficiency of individual dairy farms in northern Germany. To the extent that agricultural production is characterised by heterogeneous production conditions, estimation techniques that do not account for unobserved heterogeneity produce biased efficiency estimates. We therefore estimate a number of conventional panel data models and Greene's recently proposed ‘true’ random-effects model, as well as an extension of the model to ascertain the effects of different specification on the production function and efficiency estimates. Our results appear to support theoretical expectations and previous findings according to which a specification that is both time-variant and also controls correlations between unobserved heterogeneity and the explanatory variables avoids heterogeneity bias and thus ensures consistent efficiency estimates.

Policy Reform and Adjustment in the Agricultural Sectors of Developed Countries

Brink, L. — 2007-10-09

Emissions Trading Principles and Practice (second edition)

Romstad, E. — 2007-10-09

China's Agricultural Development: Challenges and Prospects

Keyzer, M. A., Qiu, H. — 2007-10-09

Environmental Costs and Benefits of Transgenic Crops

Furtan, W. H. — 2007-10-09

Choice Modelling and the Transfer of Environmental Values

De Civita, P. — 2007-10-09