RAINFALL, THE MÉLINE TARIFF, AND WHEAT PRODUCTION IN MEDITERRANEAN FRANCE, 1885–1914

Wheat production stagnated in France during the late nineteenth and early twentieth century, while cultivated acreage and wheat output declined sharply around the Mediterranean from the 1870s. Wheat output never recovered in this region despite the introduction in 1885 of tariff measures, such as the 1892 Méline Tariff. This paper analyses the response of Mediterranean wheat growers to changes in local rainfall and to variations of the duty on imported grains. It uses regional level data for nine administrative divisions located on or near the Mediterranean and assesses the impact of rainfall on yields. It argues that an interplay of protectionist policies and environmental conditions explain the decline of wheat production.     

Nonparametric estimation of an instrumental regression: A quasi-Bayesian approach based on regularized posterior

We propose a quasi-Bayesian nonparametric approach to estimating the structural relationship φ$\phi$ among endogenous variables when instruments are available. We show that the posterior distribution of φ$\phi$ is inconsistent in the frequentist sense. We interpret this fact as the ill-posedness of the Bayesian inverse problem defined by the relation that characterizes the structural function φ$\phi$. To solve this problem, we construct a regularized posterior distribution, based on a Tikhonov regularization of the inverse of the marginal variance of the sample, which is justified by a penalized projection argument. This regularized posterior distribution is consistent in the frequentist sense and its mean can be interpreted as the mean of the exact posterior distribution resulting from a Gaussian prior distribution with a shrinking covariance operator.     

Comment

Quantitative Marketing and Economics -     

Information revelation in auctions

Auction theory has emphasized the importance of private information to the profits of bidders. However, the theory has failed to consider to what extent initially private information will remain private. We show that in a variety of contexts bidders will reveal their information, even if this information revelation is (ex ante) detrimental to them. Similarly, a seller may reveal her information although this revelation lowers revenues. We also show that bidders may be harmed by private information, even in contexts where more information has traditionally been presumed to be beneficial.     

Balancing Profitability and Customer Welfare in a Supermarket Chain

We investigate the impact of price discrimination by a large Chicago supermarket chain. First we measure the impact of the chain's current zone-pricing policy on shelf prices, variable profits and consumer welfare across its stores. Using the chain's database to simulate a finer store-specific micro-pricing policy, we study the implications of this policy on profits and welfare. We show how a store-pricing policy that is constrained to offer consumers at least as much surplus as a uniform chain wide pricing policy still enables the retailer to generate substantial incremental profits.To ensure our pricing problem exhibits a well-defined optimum, we use the parsimonious, mixed-logit demand function that allows for flexible substitution patterns across brands and also retains a link to consumer theory. We discuss the issue of price endogeneity when estimating the demand parameters with weekly store-level data. Standard instrumental variables techniques used to account for such endogeneity also seem to increase the magnitudes of own-price elasticities thereby offsetting the problem encountered by previous researchers of predicted prices from a demand model exceeding those in the actual data.     

Multiple bidding in auctions as bidders become confident of their private valuations

Bidders may increase their bids over the course of a multi-period, second-price auction if (1) they become more certain about their valuations over time, and (2) they cannot bid in the final auction period with positive probability.     

Stochastic Volatility Corrections for Interest Rate Derivatives

We study simple models of short rates such as the Vasicek or CIR models, and compute corrections that come from the presence of fast mean-reverting stochastic volatility. We show how these small corrections can affect the shape of the term structure of interest rates giving a simple and efficient calibration tool. This is used to price other derivatives such as bond options. The analysis extends the asymptotic method developed for equity derivatives in Fouque, Papanicolaou, and Sircar (2000b) . The assumptions and effectiveness of the theory are tested on yield curve data.     

An economic analysis of the possibility of reducing pesticides in French field crops

The paper aims to study the effects of reducing pesticide use by farmers in the arable sector in France and the feasibility of a policy target of reducing pesticide use by half. The originality of the approach is to combine statistical data and expert knowledge to describe low-input alternative techniques at the national level. These data are used in a mathematical programming model to simulate the effect on land use, production and farmers' income of achieving different levels of pesticide reduction. The results show that reducing pesticide use by 30% could be possible without reducing farmers' income. We also estimate the levels of tax on pesticides necessary to achieve different levels of reduction of pesticide use and the effect of an incentive mechanism combining a pesticide tax with subsidies for low-input techniques.     

Measuring Real Capital Input in OECD Agriculture

This paper provides a farm sector comparison of levels of capital input for 17 OECD countries. The estimates of capital input are derived by representing capital stock as a weighted sum of past investments. The weights correspond to the relative efficiencies of capital goods of different ages, so that the weighted components of capital stock have the same efficiency. We convert estimates of capital stock into estimates of capital services by means of capital rental prices. Comparisons of levels of capital input among countries require data on relative prices of capital input. We obtain relative price levels for capital input among countries via relative investment goods prices, taking into account the flow of capital input per unit of capital stock in each country.
Cet article se propose de comparer le niveau du capital dans Vagriculture de 17pays de l'OCDE. Les estimations du niveau de capital sont déduites en calculant un stock de capital comme une somme pondérée des investissements passés. Les poids utilisés correspondent a Vefficacite relative des biens capitaux à différents âges, de telle sorte que les différentes composantes du stock du capital ait la même efficacité. Le stock de capital est déduit une estimation des services de capital en utilisant un taux de rentabilité. Cette comparaison des niveaux de capital entre pays nécessite des données sur les prix relatifs du capital. Ces prix dépendent des prix relatifs des biens capitaux mais aussi des flux de service générés dans chaque pays par une unité de capital.