John Freebairn

Endogenous Price Policies and International Wheat Prices

International prices are modeled as Cournot equilibrium interactions of national excess demand functions, which, in turn, are solutions of domestic welfare optimization problems. It is shown that interaction of national policies can lead to excess depression and instability of both international and domestic prices. The model is estimated for wheat and is used to show that, under free trade, average world prices would be much higher while price instability would be much lower. Furthermore, the European Economic Community policies alone contribute about 80% to these distortions.

Distribution of Research Gains in Multistage Production Systems

In a multistage production system, research that reduces production costs at one stage provides benefits to producers at all stages and to consumers. Agricultural production is assumed to involve three stages: nonfarm input, farm, and marketing. Research causes a parallel drop of the supply curve. Benefits are measured as changes in economic surplus. With a competitive model, the distribution of research benefits is the same for research directed at each production stage. Implications for the distribution of research benefits of some forms of imperfect competition are investigated.

Effects of Changes in the Level of U.S. Beef Imports

Regulatory policies pertaining to beef imports are analyzed on the basis of an econometric model of the livestock sector. The model encompasses the consumption, production, trade, and retail and farm prices of fed beef, other beef, pork, poultry, and inventory levels of livestock used in the production of these products. In terms of consumer welfare, increased beef imports reduce the retail price of all meats with the larger reductions occurring for lower quality of manufacturing beef products, while in the case of producer welfare such increases reduce slaughter steer, cull cow, and feeder calf prices with a heavier burden being placed on cattle breeders relative to cattle feeders.

The Gains from Research into Tradable Commodities

This paper develops a model for assessing the aggregate level and distribution of the benefits of reseach into tradable commodities. It estimates gains to Australia and to the rest of the world from research into the wool and wheat industries.

Market Distortions and Benefits from Research

The benefits from cost-reducing research and their distribution under a range of price policies are compared with those that would arise in the absence of the policies. While any price policy affects the distribution of research benefits, the net national or world benefits may be reduced, lef unchanged, or increased, depending on the nature of the policy and the significance of the country in the world market for the commodity. Some implications for decisions on price policies and for distortions in incentives for the allocation of resources to research are raised.

Economic benefits of meteorological services

There is an increasing need for more rigorous and more broadly based determination of the economic value of meteorological services as an aid to decision-making on the appropriate level of funding to be committed to their provision at the national level. This paper develops an overall framework for assessment of the economic value of meteorological services based on the recognition that most national meteorological infrastructure and services possess the non rival properties of public goods. Given this overall framework for determination of both total and marginal benefits, four main methodologies appropriate for use in valuation studies –market prices, normative or prescriptive decision-making models, descriptive behavioural response studies and contingent valuation studies –are outlined and their strengths and limitations described. Notwithstanding the methodological limitations and the need for a much more comprehensive set of studies for the various application sectors, it is clear that the actual and potential benefits to individuals, firms, industry sectors and national economies from state-of-the-art meteorological and related services are substantial and that, at this stage, they are inadequately recognised and insufficiently exploited in many countries. Copyright

Towards Full Employment

Faster economic growth and wage restraint, especially for the low skilled, are necessary to increase employment. The tax and social security systems are more appropriate ways to compensate those with low incomes.

Water Rights for Variable Supplies

The relative merits of different systems of property rights to allocate water among different extractive uses are evaluated for the case where variability of supply is important. Three systems of property rights are considered. In the first, variable supply is dealt with through the use of water entitlements defined as shares of the total quantity available. In the second, there are two types of water entitlements, one for water with a high security of supply and the other a lower security right for the residual supply. The third is a system of entitlements specified as state-contingent claims. With zero transaction costs, all systems are efficient. In the realistic situation where transaction costs matter, the system based on state-contingent claims is globally optimal, and the system with high-security and lower security entitlements is preferable to the system with share entitlements.

Economic policy for rural and regional Australia

The efficiency and equity effects of economic policies affecting the quarter of Australians who live in rural and regional Australia (RARA) are reviewed. For the most part it is argued that economy-wide policies, rather than region or industry specific policies, are appropriate. Progressive income taxation, means-tested social security payments and government funded education, health and other services directly and efficiently redistribute to support equity. Subsidies for particular industries in RARA, such as dairy, and input subsidies targeted at RARA, such as community service obligations, misallocate resources and are ineffective in meeting equity goals. Better property rights and procedures for allocating most natural resources, especially water, are necessary.

Funding meteorological services

Different options for funding the provision of meteorological services and for charging for the information provided are described and evaluated. The basic infrastructure and general forecasts and warnings have public good properties of non rival consumption and high costs of exclusion. For these, direct government funding and free provision to all are favoured. Value added meteorological services for use by small groups of specialised users have mixed good properties, and in some cases private good properties. In this case, setting fees at marginal incremental costs for value added services is favoured for reasons of efficiency and practicality. The other options considered include government funding with zero price, and loading user fees for a contribution to funding the public good supply costs. Copyright