Paul J. Driscoll

Misspecification Testing: A Comprehensive Approach

Misspecification tests of individual assumptions underlying regression models often lead to erroneous conclusions regarding source of misspecification. Monte Carlo experiments demonstrate that a comprehensive set of individual and joint tests reduces the likelihood of such conclusions. A practical testing strategy is proposed and suggestions made regarding its implementation.

Nonparametric Tests of Profit Maximization in Oligopoly with Application to the Beef Packing Industry

In this paper, we develop new, nonparametric methods of testing for static profit maximization given noncompetitive behavior. Repeated application of the test yields “maximum likelihood” estimates of the degree of noncompetitive behavior. Using plant-level data, these newly developed nonparametric methods are employed to test the hypothesis that beef packers are profit maximizers and to measure the extent to which packers influence prices in fed-cattle markets. Copyright 1997, Oxford University Press.

Dual Second- and Third-Order Translog Models of Production

Monte Carlo evidence indicates that translog cost and profit models are generally incapable of accurately characterizing the underlying production technology. In order to discriminate between tracking difficulties caused by truncation of important high-order terms and errors in variable bias, Monte Carlo experiments are performed with secondand third-order cost and production models, using data generated with and without measurement error. The results suggest that it is errors in variables bias and not the translog specification, which is largely responsible for the poor tracking performances noted previously.

Dietary Bounds and Unshackled Demand Specifications

Conventional tests of revealed preference axioms (WARP and GARP) may yield false rejections of the hypothesis of a unique preference ordering when consumers face constraints in addition to a budget constraint. In this paper, nonparametric tests of WARP and GARP are generalized for consumers who enforce multiple constraints. In conjunction with conventional tests, the modified tests are used to reject meat demand specifications that are functions solely of price and expenditure variables. Richer specifications that include consumer perceptions of the fat content of meats and the fat constraint value in addition to conventional price and expenditure variables cannot be rejected. Copyright 1997, Oxford University Press.

MIGRANT FARM WORKERS ON VIRGINIA'S EASTERN SHORE: AN ANALYSIS OF ECONOMIC IMPACTS

The economic impact of migrant farmworkers on an agriculture-dependent region is investigated. The direct effects of inflows of state and federal dollars for migrant services, and production of high-valued commodities are computed. Indirect and induced effects are modelled through the use of the IMPLAN input output model. Various alternatives to migrant labor are investigated, including production of less labor-intensive crops, acreage retirement, and contract H2A workers. Migrants are found to create substantial economic activity on the Eastern Shore of Virginia.

Risk Aversion and Price Risk in Duality Models of Production: Comment

In his November 1992 article, Barry Coyle explores the possibility of accounting for price risk in a dual framework. In his analysis, mean and variance are treated as independent variables. In the present note, I show that for many plausible risk models, mean and variance may not be scaled independently, so that the proposed indirect utility function is not linear homogeneous in expected output prices, the covariance matrix of output prices, and input prices. Further, when the mean and variance are defined to be functions of some common factors, the derivative of the indirect utility function with respect to expected output prices will not yield the supply function.