Paolo Sckokai

Efficiency of Decoupled Farm Programs Under Distortionary Taxation

When lump-sum taxation is not feasible, decoupled transfers to farmers (which require raising government revenue) will entail welfare loss somewhere in the economy. Assuming the governments objective is to assure a given welfare level for farmers, we show that when decoupling is possible, free trade is always superior to some tariff protection for a small country, even under Distortionary taxation. As expected, for a large country there is scope for an optimal tariff policy that improves the terms of trade. However, we show a separation between the exercise of market power through an optimal tariff, and the interaction of Distortionary taxation with transfers to farmers. We conclude that decoupling is usually desirable, even in a distorted economy in which lump-sum taxation is not feasible.

The impact of private labels on the competitiveness of the European food supply chain

The report studies the impact of private labels on the competitiveness of the European food processing industry and investigates whether a system of producer indication may improve the functioning of the food supply chain. The impact is studied using economic theory and empirical and legal analysis. The study is completed with an impact assessment.

Consumer interest in specialty beers in three European markets

This study explores the quality perception of specialty beers (SBs) in Italy, Spain and Poland. Five-hundred and fifty mainstream beer consumers were enrolled in this study (two-hundred and thirty Italians, one hundred and sixty Poles and Spaniards respectively). The authors adopted a conjoint rating experiment in which the respondents were given forty SB profiles to evaluate. Each profile was described on six attributes (malt type, adjuncts, alternative source of sugars, characterizing ingredients, sensory characteristics, and retail price) varied at different levels and were asked to state his/her preference for each profile on a 9-point scale of interest. The results of this study showed that the ideal SB: (1) for the aggregate Polish panel is brewed from malted wheat, raw wheat, honey, and tropical fruits, is alcoholic and is priced below 2.00 Euros; (2) for the aggregate Italian panel consists of a beer brewed from malted wheat, maize, honey, and vanilla, is blonde and costs a maximum of 2.00 Euros; (3) for the aggregate Spanish panel is brewed from malted wheat, rye or maize, vanilla, is fruity and is priced below 2.00 Euros. The heterogeneity of interest in specialty beers observed in the three countries under test requires for the adaptation of a SB specifically to each culture in which it is sold. In this process of customization, brewers must take into account that gender modulates the effect of culture on consumer interest in SB sensory characteristics and ingredient formulation.

Regional Economic Analysis of Milk Quota Reform in the EU

This report is based on the outcome of a study carried out by the European Commissions Joint Research Centre - Institute for Prospective Technological Studies (JRC-IPTS, Spain) in cooperation with EuroCARE (Bonn, Germany) and the collaboration of the Agricultural Economics Research Institute (LEI, the Netherlands) and the Catholic University of the Sacred Heart (Unicatt, Italy). The report provides an economic impact assessment of possible implications of the Health Check of the Common Agricultural Policy (CAP), with an explicit focus on regional effects of a milk quota abolition in the EU-27 in the year 2015. For the analysis the CAPRI model was updated with econometric estimates of milk quota rents at regional level and simulation results are presented for the year 2020. The detailed spatial resolution allows identifying regions where economic changes are larger than visible from aggregated impacts at Member State or European level.

Functional separability within a quadratic inverse demand system

In this paper, a quadratic inverse (almost ideal) demand system (IQUAIDS) is derived, that generalizes the inverse (almost ideal) demand system (IAIDS). Starting from a flexible parameterization of the distance function, this model allows a more flexible specification by overcoming the potential restrictiveness of linear scale curves. However, at a point of normalization, the IQUAIDS boils down to the IAIDS, thus the additional flexibility pertains only to the specification of scale elasticities away from the point of approximation. Previous work on functional separability is extended to the case of inverse demands, and necessary and sufficient conditions for weak separability of the direct and indirect utility function derived, in terms of the Antonelli elasticities of complementarity and of the scale elasticities. Their proper parametric representation within the inverse specification is also derived. An empirical application to fish demand in Italy is provided, mainly for illustrative purposes.

Panel Data Estimation Techniques and Farm-level Data Models

Econometric models estimating parameters for agricultural policy analysis increasingly rely on unbalanced panels of farm-level data. Since such models have often been estimated through simplified approaches, in this paper we show that adopting more sophisticated panel data techniques may be very important for obtaining more reliable estimates of policy parameters. We also extend the two-stage procedure proposed by Shonkwiler and Yen (1999) and Tauchmann (2005) for the analysis of censored data to account for heteroskedasticity and correlation of the error terms of the first-stage probit models. Copyright 2012, Oxford University Press.

Consumer willingness to pay for food safety: the case of mycotoxins in milk

European statistics show that one of the most widespread source of health risks related to food is mycotoxins. The objective of this paper is to evaluate the Italian consumers’ perception of the mycotoxins’ risk and, more specifically, their willingness-to-pay (WTP) for a hypothetical bottle of milk obtained by cows in which the feed ration contains maize certified for the ‘good practices’ that reduce such risk. For this purpose, a web-based stated choice (SC) experiment involving a representative sample of 973 Italian consumers has been carried out and WTP has been measured using the panel data version of a Random Parameters Logit (RPL) model. The results show that Italian consumers are willing to pay a rather high average price premium for “reduced-micotoxin” milk. This premium becomes even higher for female, middle-age and low-education consumers.

Innovation and Consumers’ Choice

We discuss the treatment of innovation in the economic approach to demand analysis. After comparing the “new approach to consumer theory” developed by Lancaster to the “classical” approach, the issue of how to measure innovation in empirical models is considered. In particular, we argue that innovation indexes can be introduced in empirical specifications of the classical model: they can be different depending on the stage of expenditure allocation considered. Finally, an Almost Ideal demand system extended to innovation is applied to verify the impact of the additional content of “convenience” services on food demand in Italy.

The capitalization of area payments into land rental prices: a panel sample selection approach

Previous empirical literature suggests that agricultural subsidies are capitalized into farmland rents and that the introduction of the 2003 decoupling reform of the EU Common Agricultural Policy, attaching the subsidy to land only, might have even extended the phenomenon of capitalization. Employing the FADN dataset for Italy we investigate this issue using methodologies accounting for selectivity, endogeneity and individual heterogeneity simultaneously. The evidence suggests that selectivity bias causes inconsistent estimation of parameters and wrong inference. Results reveal instead that, in Italy, there is no incidence of both coupled and decoupled payments.

A Note on Two-way ECM Estimation of SUR Systems on Unbalanced Panel Data

This article considers the two-way error components model (ECM) estimation of seemingly unrelated regressions (SUR) on unbalanced panel by generalized least squares (GLS). As suggested by Biørn (2004) for the one-way case, in order to use the standard results for the balanced case the individuals are arranged in groups according to the number of times they are observed. Thus, the GLS estimator can be interpreted as a matrix weighted average of the group specific GLS estimators with weights equal to the inverse of their respective covariance matrices.