Policy reform and productivity change in Chinese agriculture: A distance function approach

Agricultural policy reform has been an important source of change in the Chinese agricultural sector. The reforms led to productivity growth and helped China to pursue its self-sufficiency goal especially in the grain sector. In order to analyze whether observable productivity growth stems from technologically induced components or from the market induced parts, a multi-input–multi-output model is derived by using an econometric distance function framework. A decomposition allows to distinguish allocative effects, scale effects, technological change, and technical efficiency change. Data on farms in Zhejiang from 1986 to 2000 are used to analyze the impact of policy reform.     

Are We Moving Towards Functioning Agricultural Markets and Trade Relations?

We introduce a special feature on the functioning of international agricultural markets. This feature is motivated by the increased interest in the functioning of commodity markets raised by unprecedented price turbulences since 2008, major structural changes through changed roles of emerging economies and related concerns regarding food security. We argue that the delineation of non‐functioning markets from markets that adequately adjusted to adverse framework conditions lacks theoretical foundation. We discuss the relevance of some results on institutions for agricultural markets in emerging and transition countries. A synthesis of the articles included in the special feature is provided by highlighting the selection of topics that span a topical range covering price formation on world and domestic markets, market power and trade policy modelling.     

Labor market participation of Chinese agricultural households: Empirical evidence from Zhejiang province

This work is devoted to the analysis of the different labor market participation regimes of Chinese farm households over the reform process in the 1980s and 1990s. Using household data over the period 1986–2002 from the province Zhejiang, we apply a multinomial logit model to empirically examine household, farm, and regional characteristics affecting the probability that farmers participate in one of four alternative labor market regimes. As generally accepted, off-farm participation is the dominant form of farm households’ labor market participation. But rural households show additionally a significant impact on rural employment mainly linked with non-agricultural household business. Results suggest that labor market decisions are significantly related to several family, farm, and village characteristics. In particular, we find education to be a key determinant of participation. Furthermore, results point to a higher probability of female household members to take up off-farm work.     

Residual demand measures of market power of Russian wheat exporters

Traditionally, the international wheat market has been considered a good example of a market with perfect competition. Yet, several articles provide evidence of imperfect competition and price discrimination in the wheat trade. However, these studies focused on traditional high‐quality wheat exporters such as Canada and the United States. In contrast, this article investigates whether Russian wheat exporters exercise market power in eight selected importing countries using the residual demand elasticity (RDE) model. The article makes two major contributions. First, it focuses on a nontraditional exporter, who exports mainly wheat of mediocre quality to low‐ and middle‐income countries. Second, the RDE model is estimated for the first time using a nonlinear estimator, the instrumental variable Poisson pseudo‐maximum likelihood estimator. This is important because the double logarithmic functional form can provide biased results in the presence of heteroskedasticity. The results indicate that Russian wheat exporters can exercise market power in only a few markets, while they are price takers in the majority of importing countries.     

Regional‐Level Analysis of Oligopsony Power in the Ukrainian Dairy Industry

Transition was characterized by massive structural changes in most economic sectors in Ukraine. This is especially true for the dairy sector. Several countervailing developments took place under transition that affected the dairy industry. Interregional trade became feasible, the importance of milk delivered by households increased significantly, and most dairies became investor‐owned companies. The latter point and the fact that the Antimonopoly Committee of Ukraine detected several price cartels in the industry lead us to offer that after transition, dairies were able to exercise oligopsony power toward dairy producers at the regional level. This paper estimates market structure models for raw milk in Ukraine using a translog production function for the processing sector at the national and regional level. The results suggest the existence of oligopsony power in three of 25 administrative regions in Ukraine, coupled with a potential deviation of procurement prices for raw milk from the value marginal product of raw milk ranging from 24.6% to 49.4%.     

Are Russian Wheat Exporters Able to Price Discriminate? Empirical Evidence from the Last Decade

Significant changes have taken place in the world wheat market in the last decade. Russia, a former net wheat importer, has become a leading exporter with a world market share of 11.2% in 2009. This increasing importance and the discussion about the establishment of a grain‐OPEC consisting of Ukraine, Kazakhstan and Russia has raised the issue of pricing behaviour of Russian wheat exporters. Although there are several studies on the pricing behaviour of Canadian and US wheat exporters, there is none so far for Russian wheat exporters. This study provides a quantitative analysis of the pricing behaviour of Russian wheat exporters, explicitly taking account of the export tax imposed between 2007 and 2008. We employ a pricing‐to‐market (PTM) model on quarterly Russian wheat‐export data, covering the period from 2002 to 2010 and 25 export destinations. Our findings indicate that (i) Russian wheat exporters exercised PTM in only a few importing countries over the whole time period, and (ii) PTM behaviour was more pronounced in the aftermath of the export tax period (i.e. 2008–2010) than before.     

Gravity model estimation: fixed effects vs. random intercept Poisson pseudo-maximum likelihood

The standard Anderson and van Wincoop gravity model has typically been estimated using a fixed-effects approach. However, a fixed-effects approach has a major drawback: it does not allow for the estimation of exporter- and importer-invariant variables. Thus, at least in a cross-sectional context, economically relevant variables such as exporter and importer gross domestic product are disregarded. We propose a random intercept model to address this gap. For large datasets, this approach not only provides identical estimates like a fixed-effects approach, but also allows for the estimation of exporter- and importer-invariant variables.     

APPROACHES AND METHODS FOR THE ECONOMETRIC ANALYSIS OF MARKET POWER: A SURVEY AND EMPIRICAL COMPARISON

This study discusses two widely used approaches in the New Empirical Industrial Organization (NEIO) literature and examines the strengths and weaknesses of the Production-Theoretic Approach (PTA) and the General Identification Method (GIM) for the econometric analysis of market power in agricultural and food markets. We provide a framework that may help researchers to evaluate and improve structural models of market power. Starting with the specification of the approaches in question, we compare published empirical studies of market power with respect to the choice of the applied approach, functional forms, estimation methods and derived estimates of the degree of market power. Thereafter, we use our framework to evaluate several structural models based on PTA and GIM to measure oligopsony power in the Ukrainian dairy industry. The PTA-based results suggest that the estimated parameters of oligopsony power are significantly different from zero, while GIM-based results do not indicate any evidence of oligopsony market power in the Ukrainian dairy industry. Moreover, estimations results vary substantially due to the employed estimation procedure.