Counting the cost: the reserve price scheme for wool 1970‐2001

This paper provides a policy commentary on the collapse in 1991 of the Australian Reserve Price Scheme for wool. A key cause of the collapse in the Scheme was a change in the RPS's governance arrangements, which led to increased political pressures to raise prices to unsustainable levels. In addition, in this paper an estimation has been made of the direct, upfront costs of the operation of the scheme, drawing on the financial accounts of the various agencies operating the RPS and subsequent wool stockpile. This was undertaken to determine the scale of the policy failure.     

More reasons why farmers have so little interest in futures markets

The use by farmers of futures contracts and other hedging instruments has been observed to be low in many situations, and this has sometimes seemed to be considered surprising or even mysterious. We propose that it is, in fact, readily understandable and consistent with rational decision making. Standard models of the decision about optimal hedging show that it is negatively related to basis risk, to quantity risk, and to transaction costs. Farmers who have less uncertainty about prices and those with a diversified portfolio of investments have lower optimal levels of hedging. If a farmer has optimistic price expectations relative to the futures market, the incentive to hedge can be greatly reduced. And finally, farmers who have low levels of risk aversion have little to gain from hedging in terms of risk reduction, in that the certainty‐equivalent payoff at their optimal hedge may be little different than the certainty equivalent under zero hedging. These reasons are additional to the argument of Simmons (2002) who showed that, if capital markets are efficient, farmers can manage their risk exposure through adjusting their leverage, obviating the need for hedging instruments.     

Cross-subsidization Due to Inframarginal Support in Agriculture: A General Theory and Empirical Evidence

A general theory of cross-subsidization due to inframarginal support is developed. Two sources of output distortion are identified: exit deterrence and extramarginal output. Some firms would not be in business without the subsidy. Cost savings due to declining average costs are always greater than the losses incurred where price equals marginal cost. Moreover, it is theoretically possible for inframarginal subsidies to expand output more than equivalent fully coupled subsidies. Empirical analysis of U.S. dairy subsidies isolates these components of cross-subsidization and finds distortions from inframarginal support to be substantial, with implications for trade negotiations, dispute settlement, and policy formulation.     

Introduction to symposium: Smallholders in communist and postcommunist societies

The primary contributions of smallholders during the communist and early postcommunist periods have been food production and labour for large farms. Those conditions are changing, however, as modern farms require less labour and food supply may be imported. For most smallholders in Central and Eastern European and former Soviet Union countries, the postcommunist neoliberal environment has not brought significant improvement, and strong arguments can be made that land grabbing, social and economic exclusion, and rural poverty are worse than regime bias during the communist period. Cooperatives, which have empowered smallholders in other parts of the world, have not been as well developed in postcommunist nations.     

Identifying Key Customers for Novel Industrial Products

Managers responsible for novel industrial products seek to identify their most productive customers promptly, as a basis for deployment of marketing and development resources. Using a trial-and-adoption model, based upon invoice data from sales of novel industrial products over a five-year period, Richard Cardozo, David Smith and Madhubalan Viswanathan show that initial interpurchase interval (the time from initial purchase to first repeat purchase) identifies high-volume customers, no matter when they first purchased. In addition to demonstrating the usefulness of a trial-and-adoption model in analyzing purchases of novel industrial products, this study also describes for the first time four distinct purchase patterns for novel industrial products.     

The contribution of social tourism to sustainable tourism: a case study of seasonally adjusted programmes in Spain

Recent policy from the European Union has attempted to justify social tourism initiatives on the basis that they lead to a more sustainable tourism industry. However, the majority of latest research in the field has been focused on the benefits for participants, with the addition of some evidence on the economic impacts of such programmes on destinations, which have pointed towards sustainability outcomes including: a longer tourism season, more even spread of demand, and longer periods of employment for tourism workers. Yet there is a lack of direct evidence linking such programme to these outcomes. This paper aimed to explore this important disconnect between policy assumptions and evidence-based outcomes through an analysis of the deseasonalising effects of the Spanish social tourism programme for older people. The research found that this programme does have an effect on the seasonal nature of employment and economic activity in most regions studied, but that the huge volume of demand from international tourists in the high seasons masks the quantitative effects in the regions with the highest seasonal concentration of international tourists. Recommendations for policy and practice in sustainable tourism are made that are transferable to many countries and regions that adopt social tourism programmes.     

A method for reducing information asymmetry in destination–airline relationships

We propose a measure of business risk in air travel demand at the route level that can reduce information asymmetry during route development negotiations between tourism destinations and airlines. Aviation-exposed risk (AER) conveys information about the level of uncertainty with regard to air travel demand from an airline’s perspective. Using AER, tourism destinations and air service development teams can evaluate their risks from the perspective of the airline and its network. From there, an assessment can be made as to the value of air services in certain circumstances, including whether a direct underwrite or risk share between airlines and destinations is viable and necessary. By applying a portfolio analysis to an airline’s network, we find evidence that AER does indeed mimic the actual capacity distribution of the network. This provides support for AER as a useful risk measure to be used in practice.     

Unethical use of wildlife in tourism: what's the problem,who is responsible,and what can be done?

Wildlife tourism is a huge global market, the revenue from which can promote local livelihoods and tourist education, enact conservation, and improve animal welfare. Such benefits arise if wildlife tourist attractions (WTAs) prioritise ethical deliverables above financial profit, but recent work has shown that the majority of WTAs have substantial negative animal welfare and conservation impacts. In the absence of global regulatory authorities, tourist revenue has become the ultimate arbiter of what constitutes acceptable use of animals in WTAs. Tourists, however, are not adequate assessors of WTAs’ animal welfare and conservation impacts: they lack the specialist knowledge required and are subject to a number of psychological biases that obscure the ethical dimensions of decisions to attend particular WTAs. This inadequacy is evidenced, and compounded, by overwhelmingly positive reviews on TripAdvisor (the industry-leading review site), even for WTAs with objectively poor ethical standards. Our suggested solution is to empower tourists by presenting unequivocal assessments of WTAs' animal welfare and conservation impacts, hosted in the fora that tourists already use to make their travel decisions. We would thereby promote a subjective norm that tourists should consider and limit their individual negative impacts when choosing which WTAs to visit.     

Personalisation–privacy paradox: The effects of personalisation and privacy assurance on customer responses to travel Web sites

Personalisation refers to individualizing products, services, and contents according to customer interests and preferences. In order to deliver appropriate personalised offerings, firms inevitably need to collect rich customer data profiles. Prior research suggests that personalised services lead to positive customer responses such as increased willingness to disclose personal information and make purchases. However, another stream of research emphasizes negative outcomes of personalisation – namely, privacy concerns surrounding the use of personal information and associated negative effects on behaviour. The objectives of this study are twofold: (1) to examine how privacy assurance affects proximal outcomes of personalisation, such as perceived usefulness and privacy concerns; and (2) to identify the role such outcomes play in predicting customer behavioural responses, such as willingness to disclose personal information and make purchases. Our findings show that enhancing privacy assurance increases the perceived usefulness of services and decreases customer privacy concerns. Moreover, customer behavioural responses are positively related to the perceived usefulness of services and negatively associated with privacy concerns. However, despite the positive effects on perceived usefulness and purchase intentions, personalisation has no effect on privacy concerns and intentions to disclose personal information.