Jennifer S. James

Beggar-Thy-Neighbor Advertising: Theory and Application to Generic Commodity Promotion Programs

Profits from generic advertising by a producer group often come partly at the expense of producers of closely related commodities. The resulting tendency toward excessive advertising is exacerbated by check-off funding. To analyze this beggar-thy-neighbor behavior we compare a scenario where different producer groups cooperate and choose their advertising expenditures jointly to maximize the sum of profits across the groups, and a scenario where they optimize independently. In an illustrative example using 1998 data for U.S. beef and pork, the noncooperatively chosen expenditure on beef and pork advertising is more than three times the cooperative optimum. Copyright 2001, Oxford University Press.

Taxes and Quality: A Market-level Analysis

Aconventional assumption of product homogeneity when the commodity of interest is actually heterogeneous will lead to errors in an analysis of the incidence of policies, such as taxes. In this article, an equilibrium displacement model is used to derive analytical solutions for price, quantity, and quality effects of ad valorem and per unit taxes. The results show how parameters determine the effects of tax policies on quality. The potential for tax-induced distortions in quality, and the distributive consequences of those distortions, are illustrated in a case study of the market for Australian wine.

The Federal Role

The history of agricultural R&D and related government policy in the United States is one of jointly evolving state and federal, public- and private-sector roles. The private role has always emphasized more-patentable inventions, or at least innovations from which the returns seem more appropriable by a variety of intellectual property rights or other means. In agriculture, in particular, however, it is difficult for individuals to fully appropriate the returns from their research investments, leading to a general consensus that some government action is warranted to ensure an adequate investment in R&D.

Doing well by doing a body good: An evaluation of the industry-funded nutrition education program conducted by the Dairy Council of California

This article evaluates an industry-funded nutrition education program, Exercise Your Options, provided to junior high school children in California by the Dairy Council of California (DCC). The program consists of education materials provided to teachers to assist in teaching about nutritional topics. We make use of food records from before and after the program, along with records from a control group, to estimate the effects on consumption patterns of learning about nutrition. DCCs activities are funded through a per-unit assessment on California milk, making the returns to producers an interesting topic in light of recent controversy over marketing orders. This article compares the benefits to the dairy industry to the cost of the program to the dairy industry. Under a number of reasonable assumptions, the benefits to dairy producers from increased milk consumption outweigh the costs of the program. lEcon-Lit citations: D120, I120, Q130, Q180r

A Brief History of U.S. Agriculture

Almost 150 years have passed since U.S. public-sector agricultural research and development (R&D) began in earnest with the establishment of the U.S. Department of Agriculture and the passage of the Morrill Land Grant College Act in 1862, to be followed 25 years later by the passage of the Hatch Experiment Station Act in 1887. During that time, and especially in the more recent decades, U.S. agriculture changed dramatically. Public and private agricultural R&D played a major role in bringing about those changes, and the R&D systems and institutions evolved alongside and as part of agriculture.

Research Lags and Spillovers

Modeling and measuring the productivity consequences of R&D is a tricky business. The challenge in attributing productivity to R&D is to establish which research, conducted by whom, and when, was responsible for a particular productivity increase. In other words, in modeling the effects of research on agricultural productivity the two principal areas of difficulty are in the treatment of knowledge spillovers (i.e., the “by whom” part of the attribution problem) and in identifying the lag structure linking research spending, knowledge stocks, and productivity (i.e., the “when” part).

Econometric Estimation and Results

The implementation of the general model developed in Chapter 9 requires some specific choices about the detail of the model, beginning with the functional form. In the present chapter we discuss those choices, and present and interpret the resulting econometric estimates, along with the results of some analysis of the sensitivity of the estimates to model specification choices. In Chapter 11 we report the results from using the econometric estimates to compute a range of benefit-cost ratios for alternative types of research spending, and in Chapter 12 we interpret and assess the results from both the econometric estimation and the benefit-cost analysis.

Research Funding and Performance

How has public and private sector participation in agricultural R&D in the United States changed over the decades, and how has research spending on agriculture fared relative to research spending in all areas of science? Given the international interdependencies in agricultural R&D, how has research spending in the United States evolved relative to spending elsewhere in the world? This chapter describes public and private investments in R&D directed to agriculture in the United States, placing them in the context of both the overall spending on all sciences, and global spending on agricultural R&D. Then, we explore patterns of public spending on agricultural R&D within the United States, both in aggregate and among the states, with attention to the separate and joint roles of the federal government through its USDA intramural labs and the State Agricultural Experiment Stations. We consider the evolving sources of funding as well as the evolving patterns of spending. In Chapter 7, these trends in the funding and performance of agricultural R&D are linked to legislative and other policy changes.

Models of Research and Productivity

In this chapter we develop the structure of our models for estimating the effects of U.S. public agricultural research on U.S. agricultural productivity. We begin by laying out a general model relating research spending to agricultural productivity. Because this general specification includes too many parameters to be estimated individually with any degree of precision, some restrictions must be imposed. A conventional approach is to model productivity as a function of knowledge stocks that are created as a result of past research and can be represented using a distributed lag model defined by a small number of parameters. In this chapter we describe our approach for creating research knowledge stocks, including the specification of the research lag structure and state-to-state (and federal-to-state) spillovers used to construct the knowledge stocks. In later chapters we evaluate the effects of specification choices on our estimates and the implied benefit-cost ratios.

Productivity Patterns and Research Benefits

In Chapter 10 we reported the results from estimating models of productivity as a function of variables representing agricultural research and extension knowledge stocks. Various transformations of these models can be used to derive implications that are of interest to economists and policymakers. For instance, we can use the estimated model to evaluate the roles of policies in influencing the pas time path and spatial pattern of agricultural productivity. Alternatively, we can use the model to evaluate the future time path and spatial pattern of agricultural productivity given actual past and likely future research spending patterns or alternative counterfactual spending patterns. Or, we can compare productivity patterns under alternative scenarios of research spending patterns and infer measures such as benefit-cost ratios or internal rates of return.