Tacit Collusion in a One‐Shot Game of Price Competition with Soft Capacity Constraints

This paper analyzes price competition in the case of two firms operating under constant returns to scale with more than one production factor. Factors are chosen sequentially in a two‐stage game generating a soft capacity constraint and implying a convex short‐term cost function in the second stage of the game. We show that tacit collusion is the only predictable result of the whole game, that is, the unique payoff‐dominant pure strategy Nash equilibrium. Technically, this paper bridges the capacity constraint literature on price competition and that of the convex cost function.     

What Drove the Massive Hoarding of International Reserves in Emerging Economies? A Time‐varying Approach

Existing empirical models fail to explain the surge in the accumulation of foreign exchange reserves by emerging countries during the last decade. This paper provides an estimate of the demand for international reserves on a panel of emerging countries using a time‐varying panel smooth transition regression (TV‐PSTR) model to relax the assumption of coefficient stability in the relationship. Evidence is dound that the parameters are not constant. In addition, it is observed that the coefficients remained relatively stable until 2000 and then increased gradually and strongly thereafter. The specification provided here accounts for an acceleration that linear specifications fail to explain. Finally, it is found that mercantilist motives are the major driver of this acceleration.     

Productivity,technical efficiency and technological change in French agriculture during 2002-2015: a Färe-Primont index decomposition using group frontiers and meta-frontier

The objective of the article is to assess productivity change in French agriculture during 2002–2015; namely, total factor productivity (TFP) change and its components – technological change and efficiency change. For this, we use the Färe-Primont index which verifies the multiplicatively completeness property and is also transitive, allowing for multi-temporal and -lateral comparisons. We investigate the extent of heterogeneity within each type of farming sub-sample in terms of TFP change, with the help of the Herfindahl-Hirschman index (HHI). In addition, to compare the technologies among the five types of farming considered, we extend our analysis to the meta-frontier framework. Results indicate that during 2002–2015, all farms experienced TFP progress. The smallest average increase was experienced by the dairy farms and the largest by the field crop farms and the beef farms. The latter had the strongest technological progress but a deterioration in efficiency, while the opposite was found for field crop farms. The analysis of HHI reveals that sheep or goat farms are the most homogenous in terms of the direction of TFP change experienced over the period 2002–2015. The meta-frontier analysis shows that field crop farms’ technology is the most productive of all the types of farming.     

Technical and scale efficiency of crop and livestock farms in Poland: does specialization matter?

The technical and scale efficiency of Polish farms is analyzed using data envelopment analysis. Efficiency differences are measured according to farm specialization, in crop or livestock, at two points in time during transition, 1996 and 2000. The efficiency results are reviewed in light of confidence intervals provided by bootstrapping. Livestock farms are found to be, on average, more technically and scale efficient than crop farms. Scale efficiency is high for both specializations. Technical inefficiency appears mostly to be due to “pure technical” rather than “scale” inefficiency, and thus attributable to inefficient management practices. The evidence suggests that the low‐educational attainment of people engaged in agriculture is one important reason for these inefficient practices. In 2000, 64% of livestock farms and 86% of crop farms were operating under increasing returns to scale. Improvements in the land lease legislation and changes to the policy support to farmers' pensions could stimulate the land market and remove the incentives to keep a fragmented operational structure.     

Human Capital Intangibles and Performance of Franchise Networks: A Complementary View between Agency and Critical Resource Perspectives

This article examines the impact of human capital intangibles on the governance structure of franchise networks (i.e., proportion of franchised outlets) and the joint impact of human capital intangibles and governance on the performance of franchisors. Agency theory focuses on the free‐riding hazard and the costs associated with franchising in the context of high human capital intangibles. The critical resources theory highlights the weakness of company ownership and the advantages of using franchising in this context. Tests of the hypotheses derived from these theoretical frameworks indicate that these complementarily explain the governance structure and financial performance of franchise networks. Copyright © 2013 John Wiley & Sons, Ltd.     

The Luxembourg Common Agricultural Policy Reform and the European Food Industries: What's at Stake?

On June 26, 2003, the European Union (EU) adopted a new reform of its Common Agricultural Policy (CAP). Its boldest measure is the creation of a Single Farm Payment that will replace most of the present direct payments. We address quantitatively three issues raised by this new reform, using a computable general equilibrium model that allows us to measure the impacts on the food industries as well as their role in the transmission of impacts along the food chain. The first issue examined is whether this reform helps the EU15 to remove the controversial export subsidies. Our numerical results show that this reform effectively reduces the amount of export subsidies but without removing them. Our second concern lies with the production and trade distortion impacts of CAP direct payments. We investigate this issue in the case of full decoupling, as well as partial decoupling as chosen by EU15 Member States. We find that they have rather similar effects on production and trade. Finally, we explore the employment effects, and findings indicate that this reform leads to a significant decline of farm labor and, by contrast, to a very modest impact on the employment level by food processors. Generally, food industries are only marginally affected by this CAP reform. L'Union européenne (UE) a adopté une nouvelle réforme de sa Politique agricole commune (PAC) en juin 2003. La mesure la plus audacieuse a été la création d'un paiement unique par exploitation pour remplacer la plupart des aides directes actuelles. Dans le présent article, nous avons examiné trois questions soulevées par cette réforme à l'aide d'un modèle d'équilibre général calculable qui nous a permis de mesurer les répercussions sur les industries alimentaires de même que le rôle de ces industries dans la transmission des répercussions dans la chaîne alimentaire. La première question visait à déterminer si cette réforme permettait à l'UE‐15 d'éliminer les subventions à l'exportation controversées. Nos résultats numériques ont montré que la réforme diminuait effectivement ces subventions sans toutefois les éliminer. La deuxième question portait sur les répercussions des paiements uniques de la PAC sur la production et la distorsion des échanges. Nous avons examiné cette question en utilisant le découplage total et le découplage partiel retenu par les États membres de l'UE. Nous avons trouvé que les effets sur la production et les échanges étaient plutôt similaires entre les deux options de découplage. Enfin, nous avons évalué les répercussions sur l'emploi et nos résultats ont indiqué que cette réforme entraînait une baisse significative de la main‐d'?uvre agricole contrairement à de très faibles répercussions pour les entreprises de transformation des aliments. En général, les industries agroalimentaires ne sont que légèrement touchées par cette réforme.     

Farming system modelling for agri-environmental policy design: The case of a spatially non-aggregated allocation of conservation measures

This paper addresses the issue of designing policies for habitat conservation on agricultural land. The case under study requires a non-aggregated spatial distribution of the fields to be enrolled in an agri-environmental programme. A spatially explicit mathematical programming farm-based model, which accounts for three spatial levels (field, farm and landscape), is coupled with a relevant spatial pattern index (the Ripley L-function) to analyse the design and implementation of an agri-environmental programme aimed to preserve the Tetrax tetrax in the Plaine de Niort, France. The model is run using a stylised map with heterogeneous soil types and both crop growing and mixed dairy farms. Results show that valuable insights into agri-environmental programme design are gained through a detailed representation of farming system management. The suitable, non-aggregated spatial pattern for T. tetrax conservation is more costly than less-suitable, more aggregated patterns, because it tends to require equal participation of all farms. The policy simulations reveal that the various spatial patterns can be obtained through relatively simple uniform contract structures. An effective contract structure entails a set of two degressive payments which encourages all farms to enrol at least a small share of their land in the program.     

Regional relationships between inherent coffee quality and growing environment for denomination of origin labels in Nariño and Cauca,Colombia

International markets are increasingly signaling demand for quality-differentiated coffee, which the Colombian Coffee Growers Federation (FNC) proposed to exploit to identify those regional coffees that would fulfill the requirements to be classified as denomination of origin. The objective of this study was to develop and implement a sound, robust and repeatable approach with and for the FNC to identify regional causal relationships between coffee quality and environmental characteristics as bases for labels of denomination of origin. Environmental differences between coffee-growing areas in the departments of Cauca and Nariño were statistically significant for several characteristics, including the number of dry months, annual precipitation and diurnal temperature range. The dominant varieties (Caturra and Colombia) did not show major differences in quality attributes, and were pooled for the analyses with the environmental data. There are significant differences in biochemical and sensorial product characteristics between the two departments. The spatial patterns in product characteristics exhibit a non-random, regionally-changing structure that is related to those in the environmental data. The generated results provided ample evidence to support the application for regionally-based denominations of origin. Recommendations were derived to help mainstreaming the developed approach and thereby facilitate policy decisions for its use in other geographies and with other crops. Furthermore, the importance of systematic interdisciplinary institutional collaboration for large-scale denomination of origin projects was corroborated for food policy dialogue and decision making. It seems plausible that producers of high-quality products within other commodities are likely to follow the FNC in seeking denomination of origin for their goods. The presented approach is crucial to facilitate policy.     

Recent trends and structural breaks in the US and EU15 labour productivity growth

This article examines shifts in labour productivity growth in the US and in Europe between 1970 and 2007 based on econometric tests of structural breaks. Additionally, it makes use of time-series-based projections of labour productivity growth up to 2009 in order to detect breaks depending on confidence intervals of the projections. The identification of structural breaks in the US labour productivity growth is far from obvious. A statistically significant break is found in the late 1990s only if at least the 97.5th percentile of forecasts materializes in the future, which means that despite a clear pick up in productivity growth in the second half of the 1990s, the size of the hump is not large enough compared with past variations to make this change a statistically significant break. However, a significant break point is detected in the mid-1990s for the difference in labour productivity growth between the US and the EU15, even when controlling for the convergence of Europe towards the US productivity levels that has contributed to higher European performance in the early catch up phase. Finally, within Europe, the accumulation of Information and Communication Technology (ICT) capital seems to be related to differences in the shifts in structural labour productivity growth across countries.     

Does complex hydrology require complex water quality policy?

Nonpoint‐source water pollution is frequently considered intractable because it is hard to regulate large numbers of small sources and because the science associated with assessing the impact of each source is complex. New Zealand has demonstrated that it is possible to implement a simple cap‐and‐trade system to help reduce nitrogen leaching from many small farms and thereby protect water quality. This paper relates to the second challenge: are complex regulatory systems worthwhile when nitrogen delivery is complex? When nitrogen moves through groundwater to a lake, leaching from different farms reaches the lake at different times and the damage caused is temporally differentiated. Policy that regulates farmers according to the timing of their nitrogen delivery will be more complex than policy that does not. Whether the gain in efficiency justifies this additional complexity can be assessed through modelling. We use an integrated model to estimate the gains from complex nitrogen regulation that incorporates groundwater delivery times relative to simple nitrogen regulation that does not. We find that the gains from more complex regulation are small in the catchment we study and cannot justify the additional complexity required. A sensitivity analysis enables us to identify the types of catchments where complex regulation may be worthwhile.