Carlo Russo

Agricultural Support Policies in Imperfectly Competitive Markets: Why Market Power Matters in Policy Design

Most agricultural policy analysis assumes that markets are perfectly competitive, despite increasing evidence to the contrary. We demonstrate that the interaction of market power and government intervention may lead to outcomes that are counter to key results of policy analysis for perfectly competitive markets. We show that market power may reduce or eliminate entirely the net welfare benefits from removing two traditional support mechanisms, price floors and deficiency payments, and may increase considerably the governments cost of implementing either of them. Accordingly, optimally designed price support measures may improve welfare in the presence of downstream oligopoly and/or oligopsony power. Copyright 2011, Oxford University Press.

Agricultural and food economics - a new journal for a changing world

© A m Agricultural and Food Economics (AFE) is an on line peer-reviewed open-access journal supported by the Italian Association of Agricultural Economics (SIDEA) and published by SpringerOpen. This open access formula is an innovative and valuable opportunity for readers and authors who are interested in deepening their knowledge and keeping up to date on international agri-food policy and economic issues of the agricultural and food sector in a globalised world. In a fast-changing world, research in agri-food economics faces the important challenge of balancing the need of quickly publishing papers with that of following the rigorous scientific method. This e-journal tries to fill this gap by publishing peer-reviewed research articles that are open-access, and thus accessible to users immediately and free of charge for readers. AFE welcomes research articles from scholars and researchers from all over the world to publish problem-oriented, high quality and refereed papers. AFE seeks clearly written articles to promote insightful understanding of the current trends in the agri-food system. AFE publishes only original articles from a wide variety of economic perspectives that address current and relevant issues related to the agricultural and food system. Published papers focus on applied analysis, the discussion of innovative results, and relevant policy and managerial implications. Theoretical and methodological papers should be accessible to the journal’s variety of international readers. Qualitative papers and meta-analyses are welcome if they comply with the journal’s rigorous standards. Topics of specific interest of AFE include agricultural and food market analysis, agri-food firm management and marketing, organization of the agri-food chains, consumer behaviour, food quality and safety issues, economics of nutrition and food security, food and health economics, agri-food policy and trade, sustainable rural development, natural and marine resource economics, and land economics. Papers for publication in AFE are selected through a peer review process to ensure soundness, originality, relevance, and readability. AFE adopts a double-blind peer review process to ensure independent assessment of the papers. Each paper, with no exception, is reviewed by at least two referees of different nationalities. Manuscripts that are not within the scope of the journal may be returned to the authors without a formal review. The editorial board of AFE is composed, in addition to the editors in chief, by many internationally renowned economists that guarantee the high quality level of the papers published.

The growing influence of social and digital media

Purpose The purpose of this paper is to devise and then test a theoretical model to illustrate the effects of the increasing importance of social media on consumer behavior and market equilibrium in differentiated food industries. Design/methodology/approach The authors use game theory to model the strategic use of social media by firms producing high-value food products. The authors test the predictions of the theoretical model by means of a survey of 722 randomly selected Italian food consumers using an online questionnaire. Findings The model predicts that, as social media become more and more influential, consumers using the new media become more informed, and their concern about food quality attributes increases. At the same time, the consumers using mass media only receive less information and they prefer cheaper products to the high value one. As a result, the emergence of social media favours market segmentation and the hypotheses tested were: Social consumers are, on average, more informed than mass consumers and more concerned about environmental issues than mass consumers. The data support the theoretical model. Originality/value The paper contributes to the debate about the impact of information from interested sources on market equilibrium, providing an innovative analysis of the role of social media.

Designing geographical indication institutions when stakeholders’ incentives are not perfectly aligned

Purpose – Geographical Indications (GI) are complex and multi-purpose institutions. Their objectives include encouraging diversification of agricultural production, improving farmers’ income, countering depopulation of rural areas, satisfying consumer demand for high-quality good, and protecting consumers from food fraud. The authors argue that such objectives are not necessarily aligned as divergence may arise among stakeholders (such as farmers, consumers or rural communities) about the optimal design of the GI. The paper aims to discuss these issues. Design/methodology/approach – The authors developed a simple, static game-theory model describing the basic choices that a planner faces in designing a GI. Findings – The authors conclude that the optimal organization requires finding trade-offs among conflicting but equally desirable objectives. Perfect monitoring is not a sufficient condition to resolve such conflicts. Sub-consortia and flexible production agreements may increase the efficiency of a GI. ...

Small-area estimation in the presence of area-level correlated responses

ABSTRACT The Fay-Herriot area-level model for correlated response data is augmented with a between-groups-of-domains effect. Correlated-response parameters of small-area estimates no longer need the assumption of spatial contiguity. A simulation shows that area-level correlated-response observations increase the efficiency of the estimates, but do not reduce the biases.

Farms’ structural adjustment to the increasing competitive pressure: specialization vs. de-specialization in Italian agriculture

The paper provides an application of micro-data statistical analysis for agricultural economics studies. We use data from the 2000 and 2010 Censuses to build a short, two-year panel of 823.771 farms and we used the panel to describe specialization in Italian agriculture. We classified Italian farms into four groups according to their adoption of specialized Type of Farming (TOF) in 2000 and 2010 or de-specialized TOF in both surveys, or the change from a specialized to a de-specialized TOF or vice versa. The degree of specialization in Italian agriculture increased over the decade and the result was driven mostly by a relevant shift toward specialization of farms located in the mountain areas of central and southern Italy. We also found an association between the age structure of the family workforce and the choice of adopting a specialized TOF.

The efficiency of a threshold approach based on farm size to exclude farmers from the benefit of direct payments

L’articolo affronta il tema dell’utilizzo di soglie basate sulla dimensione fisica delle aziende agricole per limitare l’accesso degli agricoltori ai pagamenti diretti, come previsto dal Reg. (UE) 1307/13. Lo studio utilizza il dato censuario per confrontare il risultato dell’applicazione delle soglie dimensionali con una classificazione dei profili strategici in grado di individuare le strutture che svolgono un’attivita agricola “non trascurabile” attraverso metodologie di statistica multivariata. L’analisi empirica mette in luce l’esigenza di conciliare nelle politiche europee e nazionali due esigenze contrapposte: la concentrazione delle sempre piu scarse risorse finanziarie, da un lato, e la necessita di tutelare i piccoli agricoltori produttivi, dall’altro. La scelta della soglia efficiente dipende dalla rilevanza relativa attribuita ai due obiettivi. In particolare, la soglia di un ettaro di SAU (prevista dall’art. 10 del Regolamento) e efficiente solo se la funzione obiettivo del legislatore attribuisce uguale peso alle due esigenze. Infine, l’analisi spaziale suggerisce l’opportunita di considerare soglie meno restrittive per le aree montane o di prevedere meccanismi di compensazione per le aziende di piccole dimensioni che utilizzano canali commerciali associativi o legati al circuito di prossimita.

Modelli comportamentali dei consumatori e strategie di pricing della Grande Distribuzione Organizzata: implicazioni per le filiere agroalimentari

The paper discusses the implications of the emerging consumers behavior model for agri-food price distribution. The motivation of the study lies in the increasing relevance of the so-called basket-shoppers, who are consumers willing to buy multiple categories of products (including food) in a single shopping experience. Their purchasing decisions are based on making the maximum use of the whole basket, regardless of the individual products which go into it. This social change has prompted adaptations in the retail industry and the emergence of strategies based on one-stop-shops and category management. Such strategies focus on the joint profit maximization of the contents of the consumer’s entire basket, without considering the margins on individual products. The paper develops a simple theoretical model to describe the implications of such adaptation on agri-food price trends. In particular, the paper shows that if the retail industry consists of firms adopting category management techniques, food prices are less elastic and less correlated to the prices of agricultural products than they would be in the absence of such practices. Also, the model shows that agricultural price volatility increases and the margin on goods with inelastic demand (such as food) increases.

Gli standard privati di sicurezza alimentare : un modello di teoria dei contratti per l'analisi degli aspetti organizzativi e promozionali

In recent years, large food distributors poured considerable effort in the definition of private standards of food safety for their products. Despite these efforts, medium and large retailers have yet to begin advertising to their consumers the adoption of such standards and, in doing so, do not actively pursue a diversification strategy for their products. This behavior seems paradoxical as large retailers would benefit from product differentiation. This article focuses on the role of standards in the coordination of the supply channels and proposes a theoretical model that gives an economic motivation to the current behavior of large retailers. The first objective of this study is to demonstrate how the adoption of standards is a rational choice for large retailers, even in the case in which consumers are not willing to pay for food safety. The reason is that standards can also be used to solve information asymmetry problems and organize the supply chain. Secondly, the theoretical model of contracts suggests that, investments related to the promotion of standards to the consumers, might, under certain conditions, undermine the profits of the large distribution.

Competitive pressure and generational change in farms of the Lazio Region

Il lavoro prende spunto dal marcato declino nel numero di strutture agricole che si e verificato nella regione Lazio fra il 2000 e il 2007 per proporre alcune riflessioni sul ruolo del ricambio generazionale quale volano di sviluppo del tessuto rurale e sull’efficacia delle attuali politiche in materia. La progressiva senilizzazione della conduzione agricola e considerata un elemento di criticita, nel presupposto che gli agricoltori anziani siano meno capaci di adattare le loro strategie al nuovo ambiente economico e abbiano un orizzonte temporale piu breve, mentre i giovani conduttori sono ritenuti piu innovativi e piu adatti ad affrontare le sfide del mercato. In questa prospettiva, le misure di incentivo al ricambio generazionale, basate soprattutto sui pagamenti per il primo insediamento, sono considerate un aspetto centrale della politica di sviluppo rurale della Regione. Un’indagine condotta dall’Agenzia regionale per lo sviluppo e l’innovazione dell’agricoltura del Lazio (Arsial) e dall’Universita di Cassino, basata su un campione di 524 aziende, ha messo in risalto alcune criticita di queste politiche e ne ha evidenziato i limiti quali misure di sostegno allo sviluppo delle strutture agricole.