Brand Inertia in U.S. Household Cheese Consumption

To analyze U.S. consumers' brand choices for cheese purchases, we derive a set of discrete-choice models from dynamic utility maximization. ACNielsen Homescan Survey data on U.S. households is used to estimate a dynamic probit model for each of the top brands for cheddar, shredded, and sliced cheese in four U.S. regions. We find that households have strong brand inertia, a result robust across alternative specifications. Predicted probabilities confirm greater inertia in the top brands and consumers are more likely to switch into them. Brand inertia is relatively larger in cheddar and sliced cheese especially in the Central and Southeast regions.     

Chile's agricultural diversification

Chile's fruit sector, both in production and exports, has grown significantly since 1974. At that time, Chile introduced structural reforms in its economy which assured that market principles would operate regarding land ownership. Also, the government began a ‘hands-off’ policy which basically allowed free-market principles to prevail. As a result of these conditions operating in the economy, Chile's agricultural sector diversified from producing largely annual crops and wool to also producing a significant amount of commercial fruit crops. A second round of diversification is currently underway within the fruit industry where pears and peaches are being produced and exported in addition to apples and table grapes. In this paper we derive decision criteria when aggregate performance is evaluated from the perspective of maximizing a risk-averse utility function. Empirical evidence on Chilean fruit exports indicates that, on an aggregate level, Chilean fruit exporters are following the path of utility maximization and validates the sequence by which Chilean producers introduced nontraditional crops over time. While on an individual level there may be complex factors and constraints involved in the planting decisions, the results of this study seem to indicate that the sum of producer behavior satisfies the conditions required for maximizing a risk-averse utility function.     

Are changes in spreads of external-market debt also induced by contagion?

As governments and private companies from emerging markets have increasingly issued foreign-currency denominated debt through the 1990s, the economies concerned have become more vulnerable to abrupt changes in sovereign risk. At the same time, with closer economic integration countries have become more likely to be affected by economic problems that arise in neighboring countries. The following article uses the example of four Latin American countries to evaluate empirically the extent to which “contagion” explains changes in sovereign risk.     

Manipulation-proof equilibrium in atomless economies with commodity differentiation

Summary. In this paper, we introduce a perfect competition test which checks the incentives of arbitrarily small coalitions to behave strategically in endowments and preferences. We apply this coalitional incentive compatibility test to atomless economies with a continuum of differentiated commodities. We show that, under thickness conditions, economies with a finite number of types and economies whose set of agents' preferences is compact, pass this perfect competition test. Limiting results for replica economies are also presented. Received: July 25, 1997; revised version: December 5, 1998     

EXPLORING POTENTIAL ARMS RACES

Defense spending accounts for a larger share of national output in most countries than many of the other allocative decisions, both public and private, which the majority of economic research aims at explaining. Yet with notable exceptions, most economists have ignored this topic and relegated to political science the task of explaining how resources are allocated to this sector. This paper aims at contributing to this literature by economists. A theoretical model is developed to explain the dynamics of the arms acquisition process. Within this framework, defense expenditures are governed by the expenditures of potential adversaries if these exist. Then the model is empirically tested using a sample of countries or dyads which have been proposed to be adversaries. The direction of the prima facie causal relationship between the military expenditures of these dyads is investigated using parametric causality tests. The results indicate that some of these country's expenditures seem to reflect an arms race while other proposed dyads seem not to be adversaries, i.e., their expenditures are independent and therefore, seem to be governed by other than an external threat.     

Restricted origin principle under triangular trade flows: Implications for trade and tax revenues

In this paper we try to show that, even when we allow for the assumptions embodied in the standard literature of border tax adjustments, and furthermore restrict ourselves to the case of uniform as well as general taxes, across products and countries, the choice between origin and destination principles need not be irrelevant. In particular, when a triangular trade flow of products takes place between two states of a federation and foreign countries, unless the same principle of border tax adjustments is adopted on both domestic and foreign trade, part of the state tax base is transferred from one state to the other, leading to an undesirable reallocation of local tax revenues. We found that adoption by the Brazilian states of the restricted origin principle (origin principle applied to interstate trade and destination principle applied to foreign trade) led to a reallocation of local tax revenues from the Northeastern states to the residents of the rest of country. An obvious implication of this analysis is that reallocation of tax revenues due to bilaterally unbalanced trade could be easily adjusted by adoption of the same principle, origin or destination, for both domestic and foreign trade.     

Measurement and Testing for Equality of Foreign Price and Consumer Price Index Transmission in Russia

This paper tests for segmentation of retail meat markets in Russia before and after the financial crisis of 1998. Using monthly prices of pork and beef in 80 regions of Russia from 1994 to 1999, we measure the short-run response of regional prices to changes in foreign prices and domestic inflation. We find that changes in both foreign prices and domestic inflation have distinct impacts on the prices of these commodities in different Russian cities, indicating that the markets are segmented in the short run. An analysis of the effect of the financial crisis shows that the response to the crisis was mixed, with some regions showing more evidence of segmentation than others.     

Earnings and Schooling of Cooperative Managers

Abstract This paper estimates econometrically the economic return on schooling among Portuguese cooperative managers, based on a survey carried out in 1999. The main findings indicate that the rate of return is in line with previous published research. The results also indicate that in this sector, the return on education does not depend on the dimensions of the cooperative in which the individual works.