Randal R. Rucker

Transactions Costs and the Efficient Organization of Production: A Study of Timber-Harvesting Contracts

A transaction costs framework is developed to explain the choice between lump-sum and per unit payment provisions in private timber-harvesting contracts. Predictions about which contract type minimizes the transaction costs of presale measurement and contract enforcement and monitoring are derived and tested using private timber sales contracts from North Carolina. The empirical results provide strong support for the transaction costs approach and also reject several predictions from a risk-based model. The transaction costs framework also provides insights into the choice between negotiated and competitive sales procedures.

An Econometric Model of Cattle Inventories

Dynamic regression equations are estimated for each beef cattle breeding herd and beef cattle inventories at two levels of aggregation, the U.S. and Montana. The analysis for Montana was utilized as a guide for specification of the national equation to reduce the inference problem associated with letting the sample data help specify the model. Rational lags on average price received by farmers for calves and the ratio of fed beef to corn prices at Omaha constitute the primary explanatory variables. The equations perform exceedingly well over the sample period (1950–80) and in post-sample forecasts with the sample truncated back to 1970.

Restricting the Market for Quota: An Analysis of Tobacco Production Rights with Corroboration from Congressional Testimony

Regulatory programs that restrict output levels often impose restrictions on the transfer of rights to produce or to use particular inputs. In this paper, we use a unique cross-section, time-series data set from North Carolina to quantify the welfare effects of transfer restrictions for poundage quota under the U.S. flue-cured tobacco program. We find that the deadweight costs of such restrictions are small but that the distributional effects are substantial. We analyze congressional testimony on quota transfer legislation and conclude that our estimates of the distributional effects are consistent with expressed views of market participants.

Estimating the Structure of Market Reaction to News: Information Events and Lumber Futures Prices

We develop a new event-study technique, the distributional event response model (DERM), appropriate to relatively slowly evolving information events. We apply the model to twelve years of daily lumber futures prices and analyze the effects of three different types of information releases: (a) monthly housing starts estimates, (b) aperiodic administrative and judicial announcements about U.S.-Canada trade disputes, and (c) novel and unprecedented court decisions related to the Endangered Species Act (ESA). The information releases are different in ways that predict their relative speeds of impoundment in prices. We find that housing start events are absorbed more quickly than trade events, which are absorbed more quickly than ESA events.

The Fable of the Bees Revisited: Causes and Consequences of the U.S. Honey Program

In his 1973 paper, Steven Cheung discredited the “fable of the bees” by demonstrating that markets for beekeeping services exist and function well. Although economists heeded Cheung’s lessons, policy makers did not. The honey program has operated for over 50 years, supporting the price of honey through a variety of mechanisms. Its effects were minor before the 1980s but then became important, with annual government expenditures near

U.S. Private Oil and Natural Gas Royalties: Estimates and Policy Considerations

100 million for several years. Reforms of the program in the late 1980s reduced its market effects and budget costs, returning it to its original role as a minor commodity program. Although the 1996 Farm Bill formally eliminated the honey program, it was reinstated in the 2002 Farm Bill. We measure the historical welfare effects of the program during its various incarnations, examine its frequently stated public interest rationale—the encouragement of honeybee pollination—and interpret its history in light of economic theories of regulation.

US Private Oil and Natural Gas Royalties: Estimates and Policy Relevance

Widespread ownership of oil and natural gas resources by private individuals, which is unique to the United States, entitles those citizens to a share of the proceeds from production. This share is typically specified as a royalty rate in leases with producers that is based on gross revenues from production. To our knowledge, no information regarding the magnitude of private income from this source has been published previously. We develop estimates that partially fill this gap in our knowledge. Focusing on onshore resources in the continental United States, we determine that the share of total oil and natural gas production attributable to privately-owned minerals has been approximately 75 percent in recent years. We then estimate private royalty rates and income. We find that average private royalty rates in recent years were 13.5 percent for oil and 11.8 percent for natural gas and that private royalty income from oil and gas production was

The Economic Effects of Supply Controls: The Simple Analytics of the U. S. Peanut Program

21-22 billion in 2011 and 2012. We then consider a number of current policy issues upon which our estimates have bearing. These include exports of liquefied natural gas and crude oil, effects of refinery and pipeline constraints, state and federal tax policy, and regulation of technology.

Transaction Costs and Cattle Marketing: The Information Content of Seller-Provided Presale Data at Bull Auctions

Widespread ownership of oil and natural gas resources by private individuals is unique to the United States. The owners share is typically specified as a gross revenue royalty. We develop estimates of income from production of privately owned minerals. Focusing on onshore resources in the continental United States, we determine that the share of total oil and natural gas production attributable to privately owned minerals has been approximately 75 per cent in recent years. We find that average private royalty rates in recent years were 13.5 per cent for oil and 11.8 per cent for natural gas, and that private royalty income from oil and gas production was

Transaction Costs and the Collection of Information: Presale Measurement on Private Timber Sales

21–22 billion in 2011 and 2012. We then briefly discuss four current policy issues upon which our estimates have bearing: exports of liquefied natural gas and crude oil, effects of refinery and pipeline constraints, state and federal tax policy, and regulation of technology.