Everett B. Peterson

Market-Structure Determinants of National Brand-Private Label Price Differences of Manufactured Food Products

This paper estimates the relationships between market structure and the Lerner index of monopoly constructed from price data on processed food products sold through grocery stores. A theoretical model of a differentiated oligopoly specifies two determinants of price-cost margins: the Herfindahl-Hirschman index of seller concentration adjusted for the elasticity of demand and the industry advertising-to-sales ratio. The results indicate that the three principal determinants of price-cost margin variation, in order of their impacts, are: advertising intensity, elasticity of demand, and concentration. Previous structure-performance studies that did not incorporate the elasticity of demand were probably misspecified.

Avocado Pests and Avocado Trade

This article evaluates the effects of a November 2004 phytosanitary rule that removed seasonal and geographic restrictions on the importation of fresh Hass avocados from approved orchards in Mexico to the United States. With the remaining systems approach compliance measures in place, pest risks do not substantially increase and U.S. net welfare rises by

Determinants of Food Stamp Program Exits

77 million. Removal of remaining compliance measures may lead to lower net welfare gains depending on which measures are eliminated and the estimated probabilities of pest infestations. Copyright 2008, Oxford University Press.

A Critical Assessment of Supply-Demand Models of Agricultural Trade

This article examines factors that influence Food Stamp Program exits and finds that families who leave the Temporary Assistance to Needy Families (TANF) program are also more likely to leave the Food Stamp Program. However, the influence of TANF departure is smaller in states with large TANF caseload declines. The results also suggest that many families leaving the Food Stamp Program are still eligible for benefits. These families may have poor information on food stamps eligibility in the face of TANF departure or may view Food Stamp Program reauthorization procedures as too costly relative to program benefits.

Evaluating the Trade Restrictiveness of Phytosanitary Measures on U.S. Fresh Fruit and Vegetable Imports

We offer a critical assessment of static, deterministic, reduced form, supply-demand (SD) models of agricultural trade. A commonly used and well-documented model has significant limitations: no explicit treatment of factor mobility between farm and nonfarm sectors, nonzero profits in some sectors, no substitutability among feedstuffs in livestock sectors, violation of the law of one price, small marketing margins for some commodities, and incomplete coverage of the agricultural sector. Such limitations have significant impacts on the magnitude and direction of projected world price and welfare changes. We believe agricultural policy analysis should first focus on the remediation of these limitations before proceeding to more complex issues like dynamics and uncertainty.

A Comparison of Oligopoly Welfare Loss Estimates for U.S. Food Manufacturing

Empirically assessing sanitary and phytosanitary regulations has proven difficult because most data sources indicate whether a regulation exists but provide no information on the type or importance of the respective measure. In this article, we construct a novel database of U.S. phytosanitary measures and match these to 47 fresh fruit and vegetable product imports from 89 exporting countries over the period 1996–2008. A product‐line gravity equation that accounts for zero trade flows is developed to investigate the trade impact of different pest‐mitigation measures. While the results suggest that phytosanitary treatments generally reduce trade, the actual restrictiveness of these measures diminishes dramatically as exporters accumulate experience, and it vanishes when exporters reach a certain threshold. The results have important policy implications considering the number of empirical studies that find a negative impact of non‐tariff measures on trade.

Impacts of growth stimulants in the domestic livestock sector

Capitalizing on theoretical advances in calculating deadweight welfare losses due to imperfect competition, we compare eight empirical estimates for the U.S. food manufacturing industries. The estimates incorporate varying theoretical assumptions about demand, supply, and firm pricing behavior; and utilize various data sources, time periods, and assumptions about the proper competitive benchmark. While the estimates of average allocative losses range widely, there is a high degree of congruence in the rankings of economic losses due to market power. Thus, from the perspective of efficient antitrust enforcement, the newer theoretical oligopoly approaches and the traditional structure-conduct-performance models would target similar industries.

New Estimates of Welfare and Consumer Losses in U.S. Food Manufacturing

Many individuals are predicting a second Green Revolution in agriculture from the introduction of growth stimulants into the livestock industries. An economy-wide approach is used to determine the affects on prices and quantities of introducing growth stimulants in the domestic dairy and pork industries. In general, the impacts are found to be much smaller than previous research focused at the sectoral level has suggested. Increases in the amount of lean meat per hog may actually lead to a reduction in the total number of hogs slaughtered.

Potential of Regional and Seasonal Requirements in US Regulation of Fresh Lemon Imports

In the past 15 years, industrial-organization economists have significantly expanded the range of algorithms for calculating welfare losses due to imperfect competition. We compare eleven empirical estimates of economic losses due to market power in 47 U.S. food manufacturing industries, almost all of them previously unpublished. Each of the studies incorporate different theoretical assumptions about demand conditions, supply conditions, or industry pricing behavior; or they utilize various data sources, time periods, and assumptions about the proper competitive benchmark. The estimates of average allocative losses due imperfect competition range from 0.2 percent to an impossibly high 289 percent of industry output; consumer losses range from 6.0 percent to 816 percent. However, there is a high degree of congruence in the rankings of economic losses due to market power. Hence, from the perspective of antitrust enforcement, the choice of industry targets has not been greatly altered by advances in estimation techniques.

Going the Distance: How Does Market Access Affect Demand for IPM Packages?

Peterson regional destination and seasonal access restrictions are regulatory options available to mitigate pest risk on imported fresh fruits and vegetables rather than impose an import ban. This paper analyses the economic effects of potential entry of Argentine lemons into the United States under alternative geographic and seasonal restrictions. One challenge to assessing the economic effect of entry is determining the post‐entry quantity of Argentine exports. Using a homothetic trans‐log expenditure function, we calibrate a set of reservation prices for US demand for Argentine lemons based on observed prices and quantities of other lemon varieties. These are compared with a set of projected entry prices to determine whether entry will occur and post‐entry export levels. Across the policy scenarios, Argentine lemon exports to the United States range from 8.0 to 14.9 million kg. Higher prices for Argentine lemons reduce its exports to the European Union and other markets, while lemon exports from Chile and Mexico are adversely affected. Broader applications of regional and/or seasonal restrictions may be effective policies for achieving pest risk mitigation goals in a manner consistent with WTO obligations to minimise distortions to trade.