Don E. Ethridge

Functional Form Model Specification: An Application to Hedonic Pricing

A combination of conceptual analysis and empirical analysis-partial regression and residuals analysis-was used to derive an appropriate functional form hedonic price model. These procedures are illustrated in the derivation of a functional form hedonic model for an automated, econometric daily cotton price reporting system for the Texas-Oklahoma cotton market. Following conceptualization to deduce the general shapes of relationships, the appropriate specific functional form was found by testing particular attribute transformations identified from partial regression analysis. Minimizing structural errors across attribute levels and estimation accuracy were used in determining when an appropriate functional form for both implicit and explicit prices was found.

An Automated Econometric Approach for Estimating and Reporting Daily Cotton Market Prices

An automated price reporting system developed through computer technology and hedonic price theory is used to estimate daily cotton market prices, premiums, and discounts. This objective approach for reporting cotton market prices was developed to complement the objective measures of high volume instrument grading of cotton. The computerized, econometric system is limited to the Texas and Oklahoma marketing regions where sales are readily available from electronic markets. The econometric based system has shown all the characteristics of an efficient price reporting system; it is accurate, reliable, consistent, and repeatable in its working process and price estimates.

The Inclusion of Wastes in the Theory of the Firm

The discharge of wastes from firms into the environment is determined by market considerations. Firm production is classified as primary product, by-products, and waste products, and the theory of the firm is used to show the economic difference between waste products and by-products and the effects of user charges on the three types of production and the employment of resources. Evidence from other studies supporting the conclusions is presented.

Economics of redberry juniper control in the Texas Rolling Plains

Redberry juniper (Juniperus pinchotii Sudw.) is a common invasive brush species that reduces rangeland productivity over vast acreages in the Rolling Plains and Edwards Plateau regions of Texas. The objectives of this study were to evaluate the economic feasibility of redberry juniper control and determine the optimum treatment cycle for maintenance burning. A response equation was used to estimate the relationship between herbage production and redberry juniper canopy. Data to estimate the relationship was obtained for a site in the Texas Rolling Plains. The analysis used chaining as the initial treatment and periodic prescribed burns as maintenance treatments. Additional livestock production resulting from brush treatments and the costs of treatments were estimated and used to calculate net present values of the investment in brush control over a 30-year time horizon. Net present values indicated that juniper control was economically feasible across a wide range of economic and environmental conditions. Prescribed burn intervals were found to be optimal at 7-year intervals under most conditions.

Returns to municipalities from integrating crop production with wastewater disposal

Abstract Land application of wastewater provides an alternative for wastewater deposition which can be both environmentally sound and economically viable. Effluent from the wastewater system of the city of Lubbock, Texas, USA was used for crop irrigation as a study case. A dynamic optimization model was developed to determine the optimal cropping system that would utilize all the effluent supplied, remove all hazardous materials from the effluent, and maximize crop net revenues. The results indicate that the optimal crop composition contains alfalfa, wheat-corn, wheat-grain sorghum, and cotton. The study also reveals that increases of cropland area and effluent volume could increase municipal revenues.

Textile Manufacturers' Market Valuation of Cotton Fiber Attributes

This study provides an analysis of the price-quality relationships of U.S. cotton using primary data collected from textile manufacturers, the end users of fiber. Hedonic prices of fiber attributes are estimated for three production regions - West, South Central, and South - over the 1992-95 study period. Results indicate that cotton price is determined by quality attributes and nonquality factors in the end-use market. There are similarities and differences in valuation of fiber attributes based on region of origin of the cotton.

PRODUCER RETURNS FROM COTTON STRENGTH AND UNIFORMITY: AN HEDONIC PRICE APPROACH

Implicit (hedonic) producer prices for fiber strength uniformity were estimated for the southwest U.S. cotton market using seemingly unrelated regression and market sales data from 1983/84 and 1984/85, Fiber strength and length uniformity had significant effects on the price of cotton, but price was less responsive to both attributes than anticipated. Producer prices were most responsive to fiber length and micronaire and least responsive to color and strength. The market at the producer level appears to be making effective price adjustments with respect to factors such as fiber color, trash content, micronaire, fiber length, and location, but strength and length uniformity premiums and discounts are smaller than those paid by end users.

Producer prices in cotton markets: Evaluation of reported price information accuracy

This study evaluates the accuracy of the US Department of Agricultures Daily Spot Cotton Quotations (DSCQ) in reporting producer prices in the Texas-Oklahoma cotton production regions. Analysis of price levels and movements suggests that the DSCQ tend to overstate estimated producer prices for base quality, overstate quality discounts, and understate producer quality premiums in relation to hedonic measurement of prices. The DSCQ also did not move with the hedonic prices on a daily basis, but tended to lag the hedonic prices over longer periods. These lead-lag relationships did not appear consistent over qualities, regions, or years.

Export taxes and sectoral economic growth: evidence from cotton and yarn markets in Pakistan

Pakistan used an export tax on raw cotton from 1988-1995 in order to suppress the internal price of cotton to benefit the domestic yarn industry. An analysis was conducted to estimate the impact of this policy on both the cotton and yarn sectors. These effects were simulated using the results of a structural econometric model of these sectors of Pakistans economy. Results indicated that the export tax had a negative impact on the growth rate in the cotton sector, while having little or no impact on the yarn sector. Thus, the export tax did not achieve its objective of increasing the growth rate of value-added (yarn) production above what would have occurred naturally.

A Markov Chain Analysis of Structural Changes in the Texas High Plains Cotton Ginning Industry

Markov chain analysis of changes in the number and size of cotton gin firms in West Texas was conducted assuming stationary and non-stationary transition probabilities. Projections of industry structure were made to 1999 with stationary probability assumptions and six sets of assumed conditions for labor and energy costs and technological change in the non-stationary transition model. Results indicate a continued decline in number of firms, but labor, energy, and technology conditions alter the configuration of the structural changes.