Richard L. Kilmer

THE PRODUCTION THEORY APPROACH TO IMPORT DEMAND ANALYSIS: A COMPARISON OF THE ROTTERDAM MODEL AND THE DIFFERENTIAL PRODUCTION APPROACH

Results indicate that, when comparing the unconditional derived-demand elasticities to the unconditional consumer demand elasticities, significant differences emerge due to the differences in the first-stage estimation procedure between the differential production approach and the Rotterdam model. In comparing the consumer demand price/cross-price elasticities to the derived-demand price/cross-price elasticities, it is clear that use of the Rotterdam model when a production approach should be used can lead to overestimation, underestimation, and incorrect signs in deriving unconditional price effects.

Vertical Integration in Agricultural and Food Marketing

Vertical integration (VI) is defined as the ownership of the production of a previously purchased input used in the manufacture of an output or the ownership of a production unit that previously had purchased the output from a particular firm. The act of ownership internalizes the exchange process. Use of the external market to obtain an input or to exchange an output may have been through the use of a contract or a spot market. The failure of the external market creates profit and risk incentives for the firm to integrate vertically. The traditional vertical market channel in the agricultural and food marketing system starts with the farm and goes to the manufacturer (first handler), who may be a processor, packing house/elevator, broker, or manufacturer, and then goes to a wholesaler and a retailer. The manufacturing level collects the product and transforms it in form, space, and/ or time. Some of the product may be sold to producers for manufacture into other goods. The remaining manufactured product will go to the consumer and be consumed in an untransformed state (e.g., tomatoes, oranges) or a transformed state (e.g., tomato sauce, concentrated orange juice). The objective of this article is to project the extent of backward and forward VI at the manufacturer level and the extent of backward integration at the retail level. The first section of the article provides a perspective on the extent of VI at each level. The second section summarizes the theoretical models of VI and identifies the variables and the impact of the variables on the extent of VI. The final section uses the variables identified in section 2 to project the change expected in VI over the next decade. The Extent of Vertical Integration

A Dynamic Plant Location Model: The East Florida Fresh Citrus Packing Industry

Static location models provide a long-run solution without the adjustments required over time. Dynamic programming allows incorporation of short- and long-run adjustments in the same plant location model. A standard transshipment model with fixed quantities at supply and demand points is integrated with a dynamic program. Results indicate new large packinghouses are (are not) competitive with existing small (large) packinghouses even though (because) existing plants can forego a return on investment for a finite period.

The Determinants of Full-Empty Truck Movements

A model is developed to explain full-empty movement decisions for motor carriers. The model is estimated for movements to Florida of carriers serving the Florida produce/ornamentals industry. The results indicate that carriers act rationally, basing their decisions on a wide range of factors. The findings also suggest that regulatory restrictions continue to result in unnecessary empty movements.

An Analysis Of Market Structure And Pricing In The Florida Celery Industry

The pricing behavior of the Florida celery industry under the current federal marketing order was examined by analyzing the implied market structure of the industry using a model proposed by Appelbaum. Point estimates of the oligopoly power index suggest that some degree of price enhancement above that which would be characterized by a perfectly competitive market may have occurred. However, the bulk of statistical evidence suggests that the departure from marginal cost pricing implied by the industrys pricing behavior is not statistically significant.

Evaluating Implicit Prices of Intermediate Products

Agricultural markets have changed over time, along with the nature and scope of U.S. agricultural production. There has been a shift from spot markets to a variety of alternative vertical exchange mechanisms (Knutson, p. 127). Examples include forward market contracting, vertical integration, cooperatives, and electronic contract marketing. This shift has concerned farmers, researchers, and government agencies because less is known about the interpretation of price differences from one transaction to another when the same exchange instrument is used (i.e., a contract). Jesse and Johnson demonstrated that different contract specifications resulted in different negotiated contract prices. Although their study was a significant contribution, the underlying structure generating the different prices was not explored. This paper utilizes the hedonic framework developed by Rosen to analyze potato contract prices in the Hastings, Florida, growing area. It was hypothesized that there were numerous and varied services associated with vertical exchange mechanisms (Carl). Implicit payments, which affect observed prices, were made and received for these services.

METHODS FOR EVALUATING ECONOMIC EFFICIENCY IN AGRICULTURAL MARKETING

An economically efficient allocation of resources maximizes consumer and producer surpluses. It can be shown that under perfectly competitive conditions, an efficient allocation of resources will evolve. It may be the global welfare optimum, but for a given set of conditions, consumer and producer surpluses can be maximized.

Effects of Market-Share and Antimerger Policies on the Fluid Milk-Processing Industry

The effects of merger restriction policies and market-share restriction policies on the structure of the Ohio fluid milk-processing industry are compared and contrasted within an intertemporal production distribution model. Individual firm size constraints are predicated on the transition probabilities of a Markov Chain. Merger restrictions are found to be less disruptive of industry structure. However, market share is a more effective tool for controlling concentration. The appropriate combination of merger-market share policies must be based on an analysis of market performance on a market-by-market basis.

THE DERIVED DEMAND FOR IMPORTED CHEESE IN HONG KONG

The objective of this paper is to provide the U.S. dairy industry with empirical estimates of Hong Kongs derived demand for imported cheese from the U.S. These estimates were used to project the effects of the European Union (E.U.) subsidy reductions on the U.S. share of Hong Kong cheese imports. Hong Kong cheese imports from the U.S. were projected to increase by 16.96% if subsidy reductions continue at the same pace as the 1994 GATT agreement and 33.92% if reductions were twice the pace.

AN EVALUATION OF THE EFFECTIVENESS OF THE FLORIDA COOPERATIVE'S SEASONAL PRICING PLAN ON SEASONAL PRODUCTION VARIABILITY

From 1993 - 1995, Florida dairy cooperatives implemented a seasonal pricing plan in an attempt to decrease the variability in seasonal production. Farmers that participated in the seasonal pricing plan were able to reduce seasonality in each year when compared to 1992 by as much as 20 percent. For farmers that did not participate, seasonality increased in each year by as much as 32 percent. Overall, the seasonal pricing plan was effective in reducing seasonality for those farmers that chose to participate in the plan and that its limited short-run success was the result of seasonality increases by non-participating farms.