John C. Bernard

What Is It About Organic Milk? An Experimental Analysis

Auction experiments were used to examine demand relationships and willingness to pay (WTP) for organic, rBST-free, no antibiotics used, and conventional milk. Elasticities showed strong substitute and complement relationships between organic, rBST-free, and no antibiotics varieties. The sum of the latter two’s premiums were not significantly different than the organic premium, suggesting diminishing marginal utility for added attributes. Results from a two-stage heteroskedastic tobit model demonstrated that WTP premiums for the varieties differ significantly by demographics and beliefs regarding the conventional version. These suggest market segments for rBST-free and no antibiotics versions could succeed alongside organic, benefiting consumers and producers. Copyright 2007, Oxford University Press.

Comparing Willingness to Pay for Organic, Natural, Locally Grown, and State Marketing Program Promoted Foods in the Mid-Atlantic Region

A choice experiment of Mid-Atlantic consumers was conducted to determine marginal willingness to pay for the attributes organic, natural, locally grown, and state marketing program promoted for strawberry preserves. The influence of purchasing venue on willingness to pay was also examined. Results indicated a price premium when purchased at a farmers market across all five states and versions. Organic was preferred to natural in only one state. Preference ordering between local and state program promoted varied. Consumers in Maryland and Pennsylvania clearly preferred local, while those in New Jersey seemed most likely to prefer the state program version.

An Experimental Investigation of Consumer Willingness to Pay for Non-GM Foods When an Organic Option Is Present

This research compared bids that consumers placed on non genetically modified (GM), organic, and conventional versions of food products in order to determine if the organic market well serves those seeking to avoid GM foods. Auction experiments using potato chips, tortilla chips, and milk chocolate were conducted with 79 subjects. Bids were modeled as a function of consumer demographics using a heteroskedastic tobit regression model. Results with the non-GM attribute nested into the organic characteristic showed that the latters marginal effects were insignificant. This suggested the potential to further develop non-GM products for consumers not willing to pay extra for the remaining organic attributes.

Energy auctions and market power: an experimental examination

Testing auction mechanisms experimentally in a controlled environment provides an inexpensive means for evaluating their relative merits. The first part of this paper focuses on the comparison of three different auctions with regard to market efficiency and pricing, given scenarios with two, four, and six competitors. Though the uniform price last accepted offer auction was superior overall, the number of competitors proved to be a more significant factor in determining auction performance. Significant exploitation of market power was observed in the duopoly case. The second part of the paper focuses on a transmission network with six sellers in which network constraints give rise to market power opportunities. Experimental evidence based on tests with student and expert subjects show exploitation of this strategic advantage. Several other scenarios are described in which the transmission network creates market power.

Asymmetric price response behavior of Red Delicious apples

A three-step econometric modeling process incorporating lag lengths, causality, and asymmetric relationships was employed to evaluate the Red Delicious apple market. Results suggest that price responses in the Western, North Central, and Northeastern regions are asymmetric, do not occur immediately, and are not centered at the wholesale market level. Shipping point prices are symmetric in response to changes in wholesale and retail market prices. However, wholesale prices in each region react asymmetrically to changes in the shipping point price and|or the regions retail price. North Central consumers see retail prices change more in response to increases in shipping point prices than decreases.

Consumer Likelihood to Purchase Chickens with Novel Production Attributes

Typical supermarket chickens are produced with novel or controversial attributes. This continues despite contrasting growth in consumer interest in organic and natural foods. This study surveyed Delaware consumers’ likelihood to purchase chicken given different attributes: free range, given antibiotics, irradiated, fed genetically modified (GM) fee, GM chicken, and price. Examining conjoint analysis data with a heteroskedastic two-limit tobit model, GM chicken and other novel attributes were found to lower purchase likelihood significantly. Understanding these results should help the industry meet consumer preferences while aiding its continued expansion to benefit workers and growers across the South.

Alternative Auction Institutions for Electric Power Markets

Restructuring of electric power markets is proceeding across the United States and in many other nations around the world. The performance of these markets will influence everything from the prices faced by consumers to the reliability of the systems. The challenges of these changes present many important areas for research. For much of the northeastern United States, restructuring proposals include, at least for the short term, the formation of a single-sided auction mechanism for the wholesale market. This research uses experimental methods to analyze how these markets may function. In the experiments, the two basic uniform price auction rules are tested under three different market sizes. Early experimental results suggest the commonly proposed last-accepted-offer auction works well, but market power could be a real concern.

Confounded by the Field: Bidding in Food Auctions When Field Prices Are Increasing

Auction experiments are commonly used to determine consumers’ willingness to pay for various food items. While their non-hypothetical nature is a positive, market substitutes create a probable confounding of bids by field prices. This study examines the influence of field prices on bids for four foods in two versions by conducting auctions before and after large price increases in 2007. Results show that bids were capped at given field prices and were significantly higher in sessions conducted after store prices increased. Percentage premiums, however, were not significantly different across sessions, suggesting that effects of field prices could be reduced. Overall, researchers must be conscious of how field prices affect bids.

Performance Results and Characteristics of Adopters of Genetically Engineered Soybeans in Delaware

Genetically engineered (GE) soybeans first became available to farmers in 1996. Despite the common questions regarding any new crop technology, the new seeds were rapidly adopted. This study examines the characteristics of adopters, as well as yield and weed control cost changes, using survey results from Delaware farmers at the start of the 2000 season. Duration analysis reveals that earlier-adopting farmers had larger farms and tended to use computers for financial management, while regression analysis shows significantly lower weed control costs and, to a lesser extent, higher yields for GE soybeans.

Methodologies for ex ante projections of adoption rates for agbiotech products: Lessons learned from rBST

Pre- and post-release adoption studies for rBST are evaluated for insights into improving ex ante projection methodologies. The conclusion is drawn that user surveys can provide reasonable projections, but the following factors require consideration. The sigmoid curve fits the data well, but the standard experiential learning justification needs reconsideration. Attitudinal variables can enhance the discrimination among users and nonusers, but useful attitudinal questions are not well developed at this point. Rents are a major determinant of use, but projecting rents and shares a priori is a difficult task. Management requirements are a significant factor in use, so that proxies for management quality need improvement. And finally, anti-biotech attitudes can be most effective if products are labeled so that labeling becomes a key element in forecasting use. lEconLit cites: Q160, Q130r