Janelle Mann

Economics of a pricing mechanism to compensate rural land owners for preserving wetlands

The purpose of this research is to analyze the Alternative Land Use Services (ALUS) program that was operational from 2006 to 2008 in the Rural Municipality of Blanshard, Manitoba. The program is assessed in terms of its effectiveness as a mechanism to achieve preservation and enhancement of wetlands controlled by rural landowners. The under-provision and depletion of wetland services can be said to be a market failure where economic agents, in the absence of a mechanism to express demand for wetland services, decrease the supply of such services below a level that the broader public would desire. Wetlands have been drained and depleted by rural landowners, many of whom are also agricultural producers. This drainage has traditionally increased “productive land” where crops can be grown. The ALUS market mechanism was designed to correct such a market failure with a payment for wetland services to landowners. The analysis finds that the ALUS program, though short-lived, was effective for the maintenance and enhancement of wetlands, thereby preserving their environmental benefits to society at large.

Rockets and feathers meet markup margins: Applications to the oil and gasoline industry

This article investigates the existence of asymmetric price transmission between crude oil, rack (wholesale) and retail gasoline prices. A threshold cointegration technique is used, with regime switches being triggered by the size of the markup margin. There is consistent evidence of band-TAR in which the crude, rack and retail prices are free to diverge until the markup margin is squeezed or stretched beyond a lower or upper critical threshold. This finding indicates that abnormally high markup margins cannot be sustained, which provides evidence against market power exertion. The threshold error correction models indicate that there is no systematic relationship between the speed of adjustment back to the long-run relationship and the markup margin, which rules out the existence of rockets and feathers.