Irrigation production functions with water-capital substitution

The dynamics of biomass growth implies that the yield of irrigated crops depends, in addition to the total amount of water applied, on irrigation scheduling during the growing period. Advanced irrigation technologies relax constraints on irrigation rates and timing, allowing us to better adjust irrigation scheduling to the varying needs of the plants along the growing period. Irrigation production functions, then, should include capital (or expenditures on irrigation equipment) in addition to aggregate water. We derive such functions and study their water-capital substitution properties. Implications for water demand and adoption of irrigation technologies are investigated. A numerical example illustrates these properties.     

Jointly Optimal Taxes and Enforcement Policies in Response to Tax Evasion

Assuming the government cannot fully observe either individual types or incomes and jointly picks optimal taxes and audit policies against evasion can significantly alter standard results from optimal income taxation and tax‐evasion models, which treat these separately. We consider this when individuals differ in their risk preferences and incomes. Given the resulting complexity, supplementing analytic results with numerical analysis helps explain the structure of the resulting policies and how they change when the distribution of income or the revenue requirements of the government change. We do this analysis with and without audit errors and with incomes exogenous or affected by occupational choice.     

Price Competition Between Teams

This study uses an experimental approach to examine whether markets are sensitive to the internal incentive structure of the competitors. Toward this goal, we modeled the competitors in a price competition duopoly game as three-player teams. Each player simultaneously declares a bid (price) and the team whose total bid was lower won the competition and was paid accordingly. The losing team was paid nothing, and in case of a tie, each team was paid half its price. This duopoly game was studied under two conditions; a cooperative treatment in which the team's profit was divided equally amongst its members and a non-cooperative one in which each individual member was paid her own bid. Whereas the Nash equilibrium is for each player in either treatment to demand the minimal price possible, we predicted that convergence to the competitive price would be much faster in the cooperative treatment than in the non-cooperative one. The experimental results firmly confirmed this prediction.     

On the cultural basis of gender differences in negotiation

We study how culture and social structure influence bargaining behavior across gender, by exploring the negotiation culture in matrilineal and patriarchal societies using data from a laboratory experiment and a natural field experiment. One interesting result is that in both the actual marketplace and in the laboratory bargaining game, women in the matrilineal society earn more than men, at odds with years of evidence observed in the western world. We find that this result is critically driven by which side of the market the person is occupying: female (male) sellers in the matrilineal (patriarchal) society extract more of the bargaining surplus than male (female) sellers. In the buyer role, however, we observe no significant differences across societies.     

Target prices,market prices,and economic efficiency in agriculture in the United States

This paper looks at one aspect of current United States agricultural policy. This concerns the attempt by the federal government to support commodity prices and income of farmers. This is accomplished through the deficiency payments program. Unfortunately, the program is inherently economically inefficient. Moreover, alternatives (short of eliminating the program altogether and not replacing it) also are not economically efficient.

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Zusammenfassung In der amerikanischen Agrarpolitik spielen Preis- und Einkommenssubventionen für Farmer eine wichtige Rolle. Der Beitrag behandelt die Wirkungen des seit 1985 bestehenden Systems von Ausgleichszahlungen für landwirtschaftliche Erzeugnisse. Diese Zahlungen errechnen sich als Differenz zwischen dem Subventionspreis für ein bestimmtes landwirtschaftliches Erzeugnis und seinem Marktpreis.Die bei den Landwirten eintretenden Wirkungen sind meist positiv, hingegen werden die Konsumenten bei Lebensmitteln mit Preiserhöhungen belastet. Seit die Marktpreise in den USA über den Weltmarktpreisen liegen, sind zusätzliche staatliche Subventionen notwendig, um landwirtschaftliche Erzeugnisse auf dem Weltmarkt verkaufen zu können. Auch dafür werden die Konsumenten in ihrer Rolle als Steuerzahler belastet. Die Kosten des Systems betragen für jeden Steuerzahler jährlich etwa 413$.Die Ausgleichszahlungen führen zu Verzerrungen bei wirtschaftlichen Anreizen und dadurch zu einer Fehlallokation von Ressourcen. Deshalb wird diese Politik vom Autor als ineffizient beurteilt. Er diskutiert Alternativen, die darauf abzielen, die gewünschten politischen Ziele zu erreichen. Doch keine dieser Alternativen geht ernsthaft das Problem der wirtschaftlichen Ineffizienz an, das mit Subventionen verbunden ist.

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Noel D. Uri is a Supervisor Agricultural Economist in the Resources and Technology Division, Economic Research Service, U.S. Department of Agriculture, 1301 New York Avenue, N.W., Washington, DC 20005, USA. The views expressed are those of the author and do not necessarily represent the policies of the U.S. Department of Agriculture or the views of other U.S. Department of Agriculture staff members.     

THE DEMAND FOR BEVERAGES AND INTERBEVERAGE SUBSTITUTION IN THE UNITED STATES

The analysis in this paper is directed at measuring the substitution between seven beverages consumed in the United States with the objective of shedding some light on just what is the relevant market for antitrust purposes. With regard to the overall beverage market considerations, there is a clear indication that consumers do substitute between different types of beverages. What must be subjectively resolved, however, is whether the extent of the indicated substitution is of significant enough magnitude to infer that two different beverages are in the same product market.