Daniele Moro

Maintaining and Testing Separability in Demand Systems

We derive a general elasticity representation of the necessary and sufficient conditions for direct weak separability of the utility function. Parametric restrictions required to implement the separability conditions are presented for three common demand systems: the Almost Ideal, Translog, and Rotterdam. Our empirical application uses the Rotterdam model to test a few separable structures within a complete U.S. demand system emphasizing food commodities. Results, based on size-corrected likelihood ratio tests, provide support for commonly used separability assumptions about food and meat demand.

Autocorrelation specification in singular equation systems

Abstract We propose a new parametric specification of the autocorrelation matrix for singular equation systems that satisfies the restrictions of adding-up and that entails only as many parameters as the number of equations.

The impact of private labels on the competitiveness of the European food supply chain

The report studies the impact of private labels on the competitiveness of the European food processing industry and investigates whether a system of producer indication may improve the functioning of the food supply chain. The impact is studied using economic theory and empirical and legal analysis. The study is completed with an impact assessment.

Regional Economic Analysis of Milk Quota Reform in the EU

This report is based on the outcome of a study carried out by the European Commissions Joint Research Centre - Institute for Prospective Technological Studies (JRC-IPTS, Spain) in cooperation with EuroCARE (Bonn, Germany) and the collaboration of the Agricultural Economics Research Institute (LEI, the Netherlands) and the Catholic University of the Sacred Heart (Unicatt, Italy). The report provides an economic impact assessment of possible implications of the Health Check of the Common Agricultural Policy (CAP), with an explicit focus on regional effects of a milk quota abolition in the EU-27 in the year 2015. For the analysis the CAPRI model was updated with econometric estimates of milk quota rents at regional level and simulation results are presented for the year 2020. The detailed spatial resolution allows identifying regions where economic changes are larger than visible from aggregated impacts at Member State or European level.

Functional separability within a quadratic inverse demand system

In this paper, a quadratic inverse (almost ideal) demand system (IQUAIDS) is derived, that generalizes the inverse (almost ideal) demand system (IAIDS). Starting from a flexible parameterization of the distance function, this model allows a more flexible specification by overcoming the potential restrictiveness of linear scale curves. However, at a point of normalization, the IQUAIDS boils down to the IAIDS, thus the additional flexibility pertains only to the specification of scale elasticities away from the point of approximation. Previous work on functional separability is extended to the case of inverse demands, and necessary and sufficient conditions for weak separability of the direct and indirect utility function derived, in terms of the Antonelli elasticities of complementarity and of the scale elasticities. Their proper parametric representation within the inverse specification is also derived. An empirical application to fish demand in Italy is provided, mainly for illustrative purposes.

From Agricultural to Bio-based Economics? Context, State of the Art and Challenges

The world economy is experiencing dramatic changes.In this context, the concept of bioeconomy (or bio-economy, or bio-based economy) has emerged as a key strategy to match human needs while facing resource efficiency requirements, based on the sustainable exploitation of biological resources. The Italian Association of Agriculture and Applied Economics (AIEAA) is launching a new journal, “Bio-based and applied economics†(BAE). The main questions behind this initiative are: why a Journal on bio-based economics? And, why is it launched by a scientific society of agricultural economists? We will try to answer these questions by briefly reviewing current trends in the evolution of academic responses to past, recent and emerging research needs in the field of agriculture economics and its interaction with the closest fields of economics, building on this examination to single out relevant challenges for future research.

Panel Data Estimation Techniques and Farm-level Data Models

Econometric models estimating parameters for agricultural policy analysis increasingly rely on unbalanced panels of farm-level data. Since such models have often been estimated through simplified approaches, in this paper we show that adopting more sophisticated panel data techniques may be very important for obtaining more reliable estimates of policy parameters. We also extend the two-stage procedure proposed by Shonkwiler and Yen (1999) and Tauchmann (2005) for the analysis of censored data to account for heteroskedasticity and correlation of the error terms of the first-stage probit models. Copyright 2012, Oxford University Press.

Consumer willingness to pay for food safety: the case of mycotoxins in milk

European statistics show that one of the most widespread source of health risks related to food is mycotoxins. The objective of this paper is to evaluate the Italian consumers’ perception of the mycotoxins’ risk and, more specifically, their willingness-to-pay (WTP) for a hypothetical bottle of milk obtained by cows in which the feed ration contains maize certified for the ‘good practices’ that reduce such risk. For this purpose, a web-based stated choice (SC) experiment involving a representative sample of 973 Italian consumers has been carried out and WTP has been measured using the panel data version of a Random Parameters Logit (RPL) model. The results show that Italian consumers are willing to pay a rather high average price premium for “reduced-micotoxin” milk. This premium becomes even higher for female, middle-age and low-education consumers.

Innovation and Consumers’ Choice

We discuss the treatment of innovation in the economic approach to demand analysis. After comparing the “new approach to consumer theory” developed by Lancaster to the “classical” approach, the issue of how to measure innovation in empirical models is considered. In particular, we argue that innovation indexes can be introduced in empirical specifications of the classical model: they can be different depending on the stage of expenditure allocation considered. Finally, an Almost Ideal demand system extended to innovation is applied to verify the impact of the additional content of “convenience” services on food demand in Italy.

The capitalization of area payments into land rental prices: a panel sample selection approach

Previous empirical literature suggests that agricultural subsidies are capitalized into farmland rents and that the introduction of the 2003 decoupling reform of the EU Common Agricultural Policy, attaching the subsidy to land only, might have even extended the phenomenon of capitalization. Employing the FADN dataset for Italy we investigate this issue using methodologies accounting for selectivity, endogeneity and individual heterogeneity simultaneously. The evidence suggests that selectivity bias causes inconsistent estimation of parameters and wrong inference. Results reveal instead that, in Italy, there is no incidence of both coupled and decoupled payments.