Modeling winegrape prices in disequilibrium

This article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the Australian market. A “markets in disequilibrium” framework is employed to motivate modeling price changes as responding to variations in excess demand/supply. The disequilibrium price equation provides estimates of regional and varietal price discounts/premiums and a measure of the speed of disequilibrium price adjustment. The equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing. Disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time.     

Simulating the Impacts of Contract Supplies in a Spot Market–Contract Market Equilibrium Setting

This article embeds a principal–agent model within a market equilibrium model of contract and cash markets to analyze the impact of contracting on the spot market for hogs. The equilibrium model incorporates both quality differentiation in the contract market and an endogenously determined cash market price. For three types of contracting scenarios, market equilibrium conditions are derived, and results are presented for a numerical example. Contrary to some empirical results, our model shows that the increased supply of hogs under typical formula-price contracts can increase or decrease the cash market price, depending on the relative size of overall contract supplies.     

Soil and water conservation technologies: a buffer against production risk in the face of climate change? Insights from the Nile basin in Ethiopia

This study investigates the impact of different soil and water conservation (SWC) technologies on the variance of crop production in Ethiopia to determine the risk implications of the different technologies in different regions and rainfall zones. Given the production risks posed by climate change, such information can be used by decision makers to identify appropriate agricultural practices that act as a buffer against climate change. Results show that SWC investments perform differently in different rainfall areas and regions of Ethiopia and that the effectiveness of technologies such as irrigation, fertilizer, and improved seeds often depends on whether these investments are coupled with SWC measures. These results underscore the importance of the selection of appropriate combinations of technologies and careful geographical targeting when promoting and scaling up SWC technologies for adaptation to climate change.     

Water and growth in an agricultural economy

We present a model of economic growth of an agricultural household that is faced with an exogenous water availability constraint. We examine the long‐run investment and consumption choices under two scenarios: (i) when the water availability constraint is binding and (ii) when it is not binding. We then compare the two scenarios to derive conditional convergence hypotheses regarding the impact of water availability on long‐run agricultural growth. Panel data from Wyoming are used to test these conditional convergence hypotheses. We find that Wyoming counties exhibit strong conditional convergence in agricultural growth. Our theoretical and empirical results demonstrate that water availability is not a determinant but can be a constraint on long‐run agricultural growth. Higher water use leads to higher growth in agricultural yield per capita but when water rights constrain water use in a county, as we found in southeastern Wyoming, there are significant losses in agricultural growth.     

Fund ownership and stock price informativeness of Chinese listed firms

We examine the impact of mutual fund ownership on stock price informativeness in China. Existing evidence shows that stock price informativeness is low in China, and attributes this to firms’ lack of disclosure incentives under the weak investor protection institutional environment. Mutual funds are more sophisticated and influential than individual investors to monitor firms, and thus serve as an external governance mechanism to improve corporate transparency. However, the impact of mutual funds in China can also be moderated by state ownership of listed firms, which reduces firms’ dependence on outside investors for capital. Indeed, we find that mutual fund ownership is positively related to share price informativeness, but this effect is less pronounced among state-controlled firms. The main policy implication from our findings is that mutual funds contribute to the corporate information environment of emerging economies but further privatization of listed firms would be needed to realize greater benefit.     

Farm size and the determinants of productive efficiency in the Brazilian Center-West

This paper explores the determinants of technical efficiency, and the relationship between farm size and efficiency, in the Center-West of Brazil. This is the region where agricultural production and total factor productivity have grown the fastest since 1970. It is also a region characterised by unusually large farms. Technical efficiency is studied with Data Envelopment Analysis and county level data disaggregated by farm size and type of land tenure. The efficiency measure is regressed on a set of explanatory variables which includes farm size, type of land tenure, composition of output, access to institutions and indicators of technology and input usage. The relationship between farm size and efficiency is found to be non-linear, with efficiency first falling and then rising with size. Type of land tenure, access to institutions and markets, and modern inputs are found to be important determinants of the differences in efficiency across farms.     

The timing of pay

There exists large and persistent variation in not only how, but when employees are paid, a fact unexplained by existing theory. This paper develops a simple model of optimal pay timing for firms. When workers have self-control problems, they under-save and experience volatile consumption between paychecks. Thus, pay whose delivery matches the timing of workers' consumption needs will reduce wage costs. The model also explains why pay timing should be regulated (as it is in practice): although the worker benefits from a timing profile that smoothes her consumption, her lack of self-control induces her to attempt to undo the arrangement, either by renegotiating with her employer or by taking out payday loans. Regulation of pay timing and consumer borrowing is required to counter these efforts, helping the worker help herself.     

On the functional relationship between tariffs and welfare

This paper uses a model of trade in two commodities between two countries to establish the following proposition. If the foreign offer curve has no points of inflection and if for each home rate of duty the equilibrium most favorable to the home country is selected (or else there is only one equilibrium), then as the rate of duty increases from zero, home welfare first rises then declines while foreign welfare steadily falls.     

“Who Done It?” Attributions by Entrepreneurs and Experts of the Factors that Cause and Impede Small Business Success

Attribution theory deals with how individuals infer causality between events and has been used to explain various social psychological phenomena such as achievement, sex stereotyping, and the impact of reward on behavior. But the direct application of the theory to entrepreneurship has been made only recently. The present study tests for the existence of a self-serving attribution bias among entrepreneurs when they enumerate the factors that contribute to or impede their business success as well as for the presence of an actor–observer attribution bias. Three samples are compared. Two are samples of entrepreneurs: one of independent pharmacists and the other a broadly based sample of business owners. A third sample is of experts. The presence of a self-serving attribution bias is shown in the two business owners' samples. In addition, clear differences are shown between the entrepreneurs and the experts, confirming the expectation of an actor–observer attribution bias.