On the Opportunity Cost of Crop Diversification

Distance functions are increasingly being augmented, with environmental goods treated as conventional outputs. A common approach to evaluate the opportunity cost of providing an environmental good is the exploitation of the distance function's dual relationship to the value function. This implies that the opportunity cost is assumed to be non‐negative. This approach also requires a convex technology set. Focusing on crop diversification for a balanced sample of 44 cereal farms in the East of England for the years 2007–2013, this paper develops a novel opportunity cost measure that does not depend on these strong assumptions. We find that the opportunity cost of crop diversification is negative for most farms.     

Cost-Effective Targeting of Land Retirement to Improve Water Quality with Endogenous Sediment Deposition Coefficients

An integrated framework that combines spatial and biophysical attributes of land with a hydrological model and an economic model is developed to identify cropland for enrollment in the Conservation Reserve Enhancement Program. Sediment deposition coefficients are determined endogenously depending on the land-use decisions on other land parcels. Application of this framework to a watershed in Illinois demonstrates that highly sloping land adjacent to water bodies should be selected for retirement. A marginal value rental payment scheme can achieve program goals of 20% sediment abatement at 39% lower cost than a productivity-based rental scheme.     

Food Choice in an Interdisciplinary Context

Reform of agricultural policies, notably the continuing elimination of production‐enhancing subsidies, makes it possible for policies to respond to social issues such as the rural environment and health in future. In this paper, we draw on a Rural Economy and Land Use (RELU) research project which is examining the potential for the development of healthy food chains and the implications for human health and the environment. One of the key issues to be addressed is consumers’ willingness to pay for the nutritionally enhanced food products from these new chains, but it is evident that only a partial understanding can be gained from a traditional economics approach. In the paper, we discuss how economists are beginning to incorporate views from other disciplines into their models of consumer choice.     

Protected Geographical Indications and Designations of Origin: An Overview of the Status Quo and the Development of the Use of Regulation (EC) 510/06 in Europe,With Special Consideration of the German Situation

This article gives an overview of the current use of the European system of protected designations of origin according to Council Regulation (EC) 510/06, using the example of Germany to demonstrate its implementation as well as evaluating the potential and future development of this system of protection. The considerations show that in a few years the number of protected products in Europe will reach a figure of over 1,000 without the dynamic of new registrations weakening in the midterm. In Germany, the system of Council Regulation (EC) 510/06 has not been used very extensively. Despite this, an increase in the number of protected products can also be expected in Germany due to the promotion orientation of the Central Marketing Association and the European Commission.     

Subjective evaluations of n-person games

Using an axiomatization of subjective expected utility due to Fishburn, we characterize a class of utility functions over a set of n-person games in characteristic-function form. A probabilistic value is defined as the expectation of some player's marginal contribution with respect to some probability measure on the set of coalitions of other players. We decribe conditions under which a utility function on the set of n-person games is a probabilistic value; we prove as well an analogous result for simple games. We present additional axioms that characterize the semivalues and, in turn, the Shapley and Banzhaf values.     

On the measurement of dynamic effects of integration

By allowing a freer interplay of market forces, the market liberalization involved in closer economic integration can improve the efficiency of productive factors. This permits greater output from the same inputs. A side effect of this improved efficiency is an improved investment climate in the integrating region. This in turn will result in a higher investment rate, thereby augmenting the initial output gains by providing the economy with more resources. The same sort of induced capital formation can also boost investment in human capital and knowledge capital. Primitive calculations of the size and timing of these induced capital formation can be made using an aggregate GDP function. A rough approximation of the adjustment path shows that the extra investment will stimulate growth for decades, although half of the total effect will occur in the first 10 to 50 years.     

The Kornai effect with partial bailouts and taxes

The model examines Kornai's observation that in the presence of bailouts, firms' demand for inputs will be greater than would otherwise be the case. This conjecture is examined in a model in which both revenue and cost uncertainty are present and in which firms making losses are partially subsidized and firms making positive profits are partially taxed. The Kornai effect is more prevalent the greater the subsidy rate, the smaller the tax rate and the greater the variance of the random variables through which uncertainty manifests itself. In the case of strongly positively correlated cost and revenue uncertainty, the absolute incidence of the Kornai effect is small.