Industry Structure and Economic Performance in the Food Manufacturing Industries

The objective of this study is to develop a simultaneous equations model of profitability, concentration, advertising expenditures and research and development outlays for the food manufacturing indushies in the United States. The data used in the estimation are subjected to regression diagnostics in an effort to determine the importance to the estimation results of a subset of the data that can have a disproportionate influence. The estimation results, especially for the advertising expenditures relationship and the research and development outlays equation, do change when a truncated data sample (based on the omission of the outliers) is used. This serves partly to explain why there is some disagreement in the literature on market structure and economic performance with regard to the impact of several economic factors.     

Effects of the Private–Label Invasion in Food Industries

Using supermarket scanner data, we test a variety of hypotheses from trade journals about the invasion of private–label food products. According to conventional industry wisdom, name–brand firms defended their brands against new private–label products by lowering their prices, engaging in additional promotional activities, and increasingly differentiating their products. Our empirical evidence is inconsistent with these beliefs.     

Stochastic Frontier Estimation of Market Power in the Food Industries

We use a modified version of the stochastic frontier model to estimate oligopoly markups above the perfectly competitive frontier, separating out deterministic markups from purely stochastic markups. Using data from 42 US food processing industries between 1990 and 2010, empirical results indicate a widespread incidence of oligopoly power, with Lerner indexes averaging approximately 21%. Further, the estimated markups increase with industrial concentration but decrease with price elasticities and imports. Finally, the estimated Lerner indexes are in the range of previous food industry estimates using New Empirical Industrial Organization (NEIO) models.     

Trade and the Political Economy of Food Standards

This article presents a political economy model of public standards in an open economy. We use the model to derive the political optimum and to analyse different factors that have an influence on this political equilibrium. We analyse the relationship between trade and the political equilibria and compare the political outcome with the social optimum to identify under which cases political considerations lead to standards being set ‘too low’ or ‘too high’, and which standards could be labelled as protectionist measures.     

Trade Creation and Diversion Effects of Preferential Trade Associations on Agricultural and Food Trade

Agricultural market distortions remain a major focus of contention in world trade negotiations. Estimates of the effects of liberalising current agricultural trade restrictions indicate an approximately $385 billion increase in global welfare, with the disproportionate share of the benefit being enjoyed by developing countries. In response to difficulties in adopting agricultural trade reforms, individual groups of countries have formed multiple bilateral and regional preferential trade agreements (PTA) to enhance trade among members. Few sectoral analyses exist of the effects on agricultural and food product trade of PTAs. This research uses a gravity model to isolate the effects of various PTAs on both intra‐ and extra‐bloc agricultural and food product trade for three time periods: 1995, 2000 and 2004. Findings strongly support PTA benefits in terms of increased intra‐bloc trade in both sectors. The findings also generally support trade creation in agricultural products. PTA membership was also associated with food trade creation in most cases, although diversion was observed for several associations composed primarily of developing countries.     

Trade Elasticity,Gravity and Trade Liberalisation: Evidence from the Food Industry

We present an econometric investigation of the trade effect produced by the elimination of tariffs in 18 food sectors for a large sample of developing and developed countries. The standard CES monopolistic competition trade model and the gravity equation were used to estimate trade substitution elasticities, exploring their sensitivity to different estimation methods. Using these elasticities, we simulate the trade effect of the elimination of tariffs, dealing with the problem of uncertainty in the estimated values. Results point to a significant variation in the elasticities estimated by different econometric methods, suggesting that the Poisson pseudo‐maximum‐likelihood estimator significantly inflates their magnitude. Simulation results indicate that trade liberalisation will strongly increase food exports especially from high income and emerging countries, leading to a general loss of market share by developing countries. The simulated trade flows obtained from the econometric approach are quite close to current evidence based on computable general equilibrium models.     

Oligopoly Power and Allocative Efficiency in US Food and Tobacco Industries

This paper computed oligopoly-induced allocative efficiency losses in 38 US food and tobacco manufacturing industries using conduct, demand and cost parameters estimated with a New Empirical Industrial Organisation (NEIO) approach. Allocative efficiency loss estimates in these industries amounted to $15.2 billion or over five per cent of sales for 1987. Statistical tests showed that these losses are generally higher than previous estimates, possibly due to the allowance of non-constant marginal costs and revised estimates of demand elasticities and conduct.     

Welfare Effects of Technological Convergence in Processed Food Industries

We develop a monopolistic competition model to investigate effects of international technological convergence on factor rewards, output composition, and welfare. Comparative static analysis indicates technological convergence improves the follower's—but impairs the leader's—international competitiveness. The leader's welfare improves unambiguously; the follower's welfare depends on the relative strength of convergence's income and terms-of-trade effects. We use data from seventeen food industries in thirty countries, 1993–2001, to test these analytical predictions. Evidence of convergence is found in thirteen of seventeen industries. Convergence lifts followers' relative wages and global value-added shares. Followers benefit from convergence's positive income effect. Leaders benefit from higher terms of trade.     

Trade Policy Implications of Sustainable Agriculture

"Les gouvernements peuvent utiliser de nombreux leviers économiques pour assurer un développement respecteux de l'environnement, et exercer leur influence par des impôts, de l'aide financeère, des politiques et des règlements, des accords, de la recherche-développement, des crédits à l'exportation, des subventions au développement régional, des baux d'exploitation des ressources, des politiques de commercialisation, des tarifs douaniers et des déductions pour amortissement".     

Trade Reform and the Corn Market: Prospects for the World Trade Organization Negotiations on Agriculture

Government support and trade restrictions on agricultural commodities are among the most globally distorting protectionist policies. This is especially true with regards to corn. Vast production subsidies and import barriers, primarily within the European Union and China, have artificially inflated the global supply of this commodity, while restricting the available consumer markets. This impact is augmented by the preferential treatment granted in these countries to the production and importation of the best available substitute to corn, soybeans. Using an econometric model with commodity data over the past 20 years, this article predicts the likely impact of potential World Trade Organization (WTO) trade pacts on these corn trade distortions. Despite the WTO setback in Seattle, the vast global benefits resulting from agricultural trade liberalization in corn alone validate a continued push towards freer trade.     

Explaining National Border Effects in the QUAD Food Trade

Using a ‘structural’ gravity‐like model, this paper first provides estimates of bilateral ‘border effects’ in food trade among the QUAD countries (the US, Canada, Japan and the EU) at the ISIC (International Standard Industrial Classification) four‐digit level (18 food sectors). It then investigates the underlying reasons for border effect, assessing the role played by policy barriers (tariffs, non‐tariff barriers to trade (NTBs) and domestic support) with respect to barriers unrelated to trade policy, such as information‐related costs, cultural proximity and preferences. In contrast to several previous findings, our results show that policy trade barriers, especially in the form of NTBs, are part of the story in explaining national border effects. Interestingly, in all country pair combinations, NTBs significantly dominate the trade reduction effect induced by tariffs. However, results show that elements linked to information‐related costs and consumer preferences matter a great deal in explaining the magnitude of border effects. These findings have implications for the economic and welfare‐related significance of national borders.     

Technological Innovation Drivers in Rural Small Food Industries in Iran

The first step in devising the best incentives to support innovation is to investigate factors that affect the development of innovations. This article contributes to exploring such factors in small food industries in the rural areas of Tehran province, Iran. Using a census sampling method, 111 managers of 60 active firms were interviewed. The results showed that in general the level of technological innovation is low in the studied firms. The managers do not find the technological changes successful in bringing benefit to their firms. Even though correlation analysis indicated a complex association matrix between independent variables, only the firm's capacity of production was associated with technological innovation as a dependent variable. Furthermore, the regression analysis revealed that factors which influence technological innovation are the firm's age, formal research and development, fixed capital, and capacity of production. The results of this study were used to derive practical suggestions for managers and policymakers to increase technological innovation in the studied industry.     

Patterns and Determinants of International Trade Costs in the Food Industry

This paper documents patterns in international trade costs in processed foods for a large cross‐section of developing and developed countries, during the 1976–2000 period. A trade costs index is inferred from a micro‐founded gravity equation that incorporates bilateral ‘iceberg’ trade costs. For 2000, the trade costs, expressed as weighted average tariff equivalent, range from 73% for the north to 134% for the south countries. The time patterns show an average reduction of about 13% in the observed period that rises to 26% for the emerging countries. However, the same does not occur for south countries. On ranking the trade costs determinants, we find that, on average, geographical and historical factors seem to dominate those of infrastructure and institutions. However, trade policy emerges as an important determinant of the trade costs between north and emerging countries.     

贸易自由化与中国的农业、贫困和公平

本项研究的目标是分析贸易自由化对中国农业及不同地区农民的农业生产(尤其是贫困农民)的影响，重点计论了中国贸易自由化进程和市场干预的变化与内容。利用CAP-SiM模型分析表明，贸易自由化对中国农业的总体影响利大于弊，但是对贫困农户的不利影响要大得多，贸易自由化可能有助于一些地区缓解贫困，但会恶化另一些地区的收入分配，同时会加剧地区内部农户的收入不均现象。