Impact of cooperative membership on market performance of Nepali goat farmers

In developing countries, agricultural cooperatives are increasingly used by farmers as a mechanism to gain market power in input and output markets. To assess the impact of cooperative membership on market channel selection and pricing outcomes, we conducted a survey of 661 Nepali goat farmers in 2019–20 and applied an endogenous switching probit model to analyze the data. Our findings indicate that cooperative membership had a significant and positive influence on farmers choosing cooperatives as their market channel. Additionally, farmers who sold their goats through cooperatives received significantly higher prices than those who sold through local markets or to goat collectors. We also observed that farmers who had access to price information were able to obtain better prices for their goats. Overall, our study highlights the potential benefits of promoting cooperative membership and marketing through cooperatives, as these efforts can help farmers improve the returns on their agricultural investments.     

Modelling economic hysteresis losses caused by sunk adjustment costs

Transition from one economic equilibrium to another as a consequence of shocks is often associated with sunk adjustment costs. Firm-specific sunk market entry investments (or sunk market exit costs) in case of a reaction to price shocks are an example. These adjustment costs lead to a dynamic supply pattern similar to hysteresis. In analogy to “hysteresis losses” in ferromagnetism, the authors explicitly model dynamic adjustment losses in the course of market entry and exit cycles. They start from the micro level of a single firm and use explicit aggregation tools from hysteresis theory in mathematics and physics to calculate dynamic losses. The authors show that strong market fluctuations generate disproportionately large hysteresis losses for producers. This could give a reason for the implementation of stabilizing measures and policies to prevent strong (price) variations or, alternatively, to reduce the sunk entry and exit costs.     

Monopoly regulation when customers need to make sunk investments: evidence from the Swedish district heating sector

Regulatory agencies routinely seek to promote price stability. A rationale for this practise might be that regulators seek to protect customers’ relationship-specific sunk investments. We develop a simple model which confirms that commitments to future rigid prices may increase welfare when customers need to make such investments. We use data from the Swedish district heating sector during the 1998–2007 period to explore the impact of monopoly pricing decisions on the take-up rate of district heating.     

交易成本与农户销售渠道选择——基于浙江省仙居县杨梅种植户的调查

笔者基于浙江省仙居县杨梅种植户的实地调查数据,利用Tobit模型,实证分析了交易成本对农户杨梅销售渠道选择的影响。研究结果显示,市场价格波动幅度、买主对杨梅质量认证的关注程度和单次平均销售数量促使农户从零售渠道转向贩卖商和加工企业渠道;交易前农户是否了解市场价格和果园到主要成交地点的距离促使农户选择零售渠道;户主年龄及种植面积对农户销售渠道选择也存在一定程度的影响,但其他家庭特征的影响则不显著。     

Moore's Law and the Semiconductor Industry: A Vintage Model*

In this paper we develop a vintage model to gain a better understanding of the semiconductor industry and its role in recent U.S. productivity gains. Unlike previous work, in our model the observed price declines of individual chips are driven by the introduction of better vintages rather than by learning economies. Dominated chips, nonetheless, continue to be produced, for a time, due to sunk investments in chip‐specific production equipment. The model lends partial support to Jorgenson's hypothesis that an exogenous increase in Moore's Law could have generated the more rapid price declines, and faster productivity growth, seen after 1995.     

Do farmers get a greater return from selling their agricultural products through e-commerce?

E-commerce allows farmers to cut out intermediaries and sell agricultural products to consumers directly. This raises the question of whether farmers get a greater return when they use e-commerce to sell their products than when they use conventional marketing channels (i.e., intermediaries). To answer this question, we collected rural household data on sales of agricultural products from Zhejiang and Shandong provinces, in which we selected pairs of villages where e-commerce was advanced and villages where e-commerce was less advanced and households in each village that used or did not use e-commerce. We employed a fixed effects model to investigate the impacts of e-commerce on the selling prices and marketing costs of agricultural products. The model results revealed that compared with the conventional marketing channel through intermediaries, the marketing costs through the e-commerce channel significantly increased, but the selling price increases much more, which results in increases in gross returns for farmers. The increases in selling prices and marketing costs using e-commerce varied among agricultural products and between different qualities of the same product. It has important policy implications for improving farmers’ incomes and agricultural marketing channels in developing countries.     

Commodity market risk from 1995 to 2013: an extreme value theory approach

In this article we examine whether extreme risk has increased in the agricultural commodity market during the period 1995–2013. We add to the literature on food price volatility by analysing the tail segment of futures price return distributions. Food price variability is a concern for governments and regulators worldwide, as most nations trade in food. High food price variability can contribute to poverty and malnourishment, in particular for people in less economically developed economies. We find no indications of systematically increasing tail-risk for the commodities in our sample. Analysis of estimated shape-parameters of the Generalized Extreme Value distribution further supports the conclusion that there is no general systematic change in the extreme risk associated with these commodity investments.     

财政收入最大化与地方政府地价竞争

本文借鉴制度经济学研究方法,将中央政府的若干治理手段嵌入到地方政府地价决定函数中,对财政收入最大化与地方政府地价竞争的治理策略做比较制度分析。本文认为,地方政府在地价决定中具有产业间边际财政总收入均等化的动机,适度提高农地征收价格以及服务业税负,有助于压缩地方政府的恶性竞争空间。产业性税收优惠政策可能只对那些租赁而不是持有地产的经营者才有效,可以考虑适度增加住宅所有者的税负来实现“增税降费”的财政收入结构调整,同时继续维持对营业场所以租赁为主的知识密集型服务业的税收优惠。     

Economic hysteresis in hog production

German hog production only responds in a very limited way to price fluctuations in the pork market. The hog production concentrates on a few regions though it is not bound to special natural conditions such as soil quality. Furthermore, the volume of production does not vary over time. Relatively high market risks, sunk costs and the flexibility of the decision maker to defer investments characterize decision problems in hog production. Thus the real option approach is chosen to explain the inertia in production capacity. By the use of panel data of specialized hog farms from the German Farm Accountancy Data Network, an empirical investment model is estimated. Formally, the model has the structure of a generalized ordered probit model. This approach allows to test for economic hysteresis in the adjustment of hog production capacity. The results confirm that uncertainty and flexibility widen the optimal range of inaction.     

Regulating the United States Railroads: The Effects of Sunk Costs and Asymmetric Risk

The Surface Transportation Board (STB) applies the theory of contestable markets to regulate dominant railroad freight movements. The STB bases its determination whether railroad revenues are excessive if they would be more than sufficient to support investment in a hypothetical stand-alone railroad designed to handle the at-issue traffic efficiently. The STB regulatory approach does not take correct account of the importance of sunk costs and irreversible investments in the railroad industry. We estimate how large the mistakes can be by applying a real options approach that takes into account the effect of sunk costs, irreversible investment, and asymmetric returns.     

Throwing good money after bad?: Nuclear power plant investment decisions and the relevance of sunk costs

Experimental psychologists and decision theorists suggest that managers are overly reluctant to terminate economically unviable projects and that they fail to ignore sunk costs. This study serves two purposes. First, it shows that the framework of prospect theory allows us to reconcile the sunk cost effect with some older, well-established ideas in investment decision-making. Secondly, the study investigates the external validity of the sunk cost research in the context of the U.S. nuclear power program. The empirical analysis is based on share price movements in reaction to, among other events, all plant completions and cancellations (over $50 million) prior to March 1984. The results are mixed. However, prudency reviews ordered by Public Service Commissions around the nation point to evidence consistent with the sunk cost fallacy.     

Rehabilitating gum arabic systems in Sudan: Economic and environmental implications

The economic and environmental benefits of gum arabic production in the Sudano-Sahelian zone appear attractive. However, the farm-level economics of gum arabic production is complex, and much more needs to be understood about the economic-environmental interactions determining farmers' gum cropping. The following paper explores these issues in Sudan through a crop profitability analysis of gum and other crops combined with financial and economic analyses of six representative gum arabic production systems. Although the returns from gum compare favourably with other crops in Sudan, essential investments by farmers in cultivating gum will depend on its real producer price being maintained and other incentives determining the relative profitability of gum.     

Identification of strategies to improve goat marketing in the lowlands of Ethiopia: a hedonic price analysis

This article aims at identifying factors that determine market prices of goats and analyse potential mechanisms by which smallholder goat producers could maximize their benefits. Data on 357 farm households and 2103 goat transactions were collected in three major goat markets in the lowlands of Ethiopia. Hedonic price models adjusted for heteroscedasticity were employed to analyse the observed price data. Model results showed the relative importance of different factors in determining goat prices. Animal attributes including age, sex, live weight, body condition and presence of horn as well as types of buyer and market outlet targeted and time of selling were found to be important. Particularly, goats marketed during festive periods where demand for meat increases (e.g. Ethiopian New Year) command higher prices. These results imply that interventions such as systematic selection schemes targeting traits demanded by the market, improved linkages to markets, easy access to market information systems and creating conducive environment including incentive mechanisms can enhance smallholder farmers’ and pastoralists’ ability to take advantage of seasonal and spatial price changes and become market responsive with effective marketing strategies. Such changes can be potent in improving the livelihoods of smallholder farmers and pastoralists.     

Monetary easing policy and long-run food prices: Evidence from China

The money easing policy in the past decade incurred a significant impact on food prices through channels of both demand and supply, and leads to a problem of welfare distribution in China. Through the construction of a theoretical model, this paper empirically studies the impact of money supply on 7 major food products in China. We find that except for the price of rice which is stable and the price of wheat flour which slightly increases, all other food prices including soybean oil, poultry meat, pork, beef and mutton, decline in response to money expansion. This mainly results from a relatively larger stimulating effect of money expansion on supply to that on demand. The governments should make precautionary policies to protect farmers from welfare loss.     

Farmers’ Adoption of Irrigation Technologies: Experimental Evidence from a Coordination Game with Positive Network Externalities in India

Electric irrigation contributes to food security in rural India, but deteriorating electrical infrastructures threaten the functioning of farmers’ pump sets. This problem could be solved through investments in energy‐efficient technologies. However, network externalities create a coordination problem for farmers. We develop a framed field experiment to study the effects of group size, leading by example, and payoff structures on the ability to coordinate technology adoption investments. The experiment is based on a game that combines features of a step‐level public goods game and a critical mass game. Our findings show that smaller groups more frequently coordinate on payoff‐superior equilibria and that higher payoffs lead to more investments. Contrary to previous studies, leading by example reduces investments but has no effect on efficiency. Building on this analysis, we discuss possible bottom‐up solutions to the energy crisis in rural India.     

EXPERIMENTAL EVIDENCE OF A SUNK‐COST PARADOX: A STUDY OF PRICING BEHAVIOR IN BERTRAND–EDGEWORTH DUOPOLY*

We experimentally test the effect of sunk costs on decision making. In the experiment, subjects play the role of price‐setting duopolists. Both firms have identical costs, including an exogenous sunk cost that varies across sessions over six different values. We observe that the sunk cost has a U‐shaped effect: From low to medium levels, average prices decrease, but from medium to high levels, average prices increase. This effect, which is consistent with loss avoidance, develops quickly and persists throughout the game. A follow‐up experiment confirms the main results of the original experiment.     

Caring About Sunk Costs: A Behavioral Solution to Holdup Problems with Small Stakes

Economics students need to be taught that opportunity costsare important for optimal decision making but that sunk costsare not. Why should this be? Presumably these students havebeen making optimal decisions all their lives, and the conceptsshould be easy for them. We show that caring about sunk costscan help agents achieve efficient investments in a simple teamproduction environment. Furthermore, the solution we proposeis uniquely efficient if the environment is sufficiently complex.Hence, in addition to explaining contract form and ownership(Williamson, 1975; Hart, 1995), studies of the holdup problemmay also provide insights into observed behavior in day-todaybilateral bargaining problems.     

The impact of price floors on farmland investments: a real options based experimental analysis

Price floors are a common instrument for market intervention to stimulate investments. In some cases, it can be observed that a price floor does not have the stimulating effect. We experimentally analyse the investment behaviour of students who take the role of farmers. The experiment considers an investment problem under uncertainty in a ‘with price floor’ and a ‘no price floor’ treatment, stylizing a decision to take an ongoing farmland investment option. We compare the actual investment behaviour with normative benchmarks of the net present value and the real options approach. Furthermore, we look at order and learning effects. The results show that the price floor has no significant impact on the willingness to invest, whereas the effects of order were statistically significant. The investment reluctance arising from an abolishment is stronger than the investment stimulation arising from the introduction of a price floor. Furthermore, neither the net present value nor the real options approach is appropriate to predict the investment behaviour in general. Nevertheless, the predictions of the real options approach enable an approximation of the participants’ investment behaviour if the individuals have an adequate chance to learn from personal experience.     

政府政策对棉农生产及环境变化的影响——以新疆南疆为例

政府在农村承担着公共服务、组织农民、保护农民和教育农民的职能,为了实现这些职能,政府出台了诸如财政补贴、金融保险、农业组织、技术推广和生产资料监管等许多促进农业生产与农民增收的政策,政府制定政策的初衷是好的,但在执行的过程中总是或多或少会产生一些负面效果,导致农民盲目扩大棉花种植面积、降低生产经营的自主性等,既不益于棉花产业的健康发展,也会给土地质量带来一定的负面影响。论文以新疆南疆为背景,分析了现行政府政策对棉农生产及环境的影响,并对政府政策引致的负面效果进行了原因剖析,指出政府职能不清、决策缺乏长远的全局意识与创新意识、政策信息不透明,政策的制定与执行缺乏系统衔接性和绩效评价环节是导致政府政策引致负面效果的原因所在。     

转型时期农户的经营投资行为-以长三角15村跟踪观察农户为例

本文利用1995—2004年长三角15村近千个农户家庭的跟踪调查数据,实证分析了样本农户的经营投资行为。研究发现,不论是对农业投资还是非农投资,投资机会的增加都会产生显著的影响;农户在经济上向城市工人的转型深化,使得农业投资和非农投资都显著减少,但特别的是,有地农户的农业投资没有降低;融资约束对农业投资的影响不大,但对非农投资构成了严重的阻碍;土地对于农业投资具有显著的正向影响;税费改革对两种投资的经济影响均不明显。