SABIIA - Sistema Aberto e Integrado de Informação em Agricultura (Sabiia)

Many cases of externalities in agricultural production, such as pesticide drift, cross-pollination, and offensive odors, are attributable to the incompatibility of neighboring land uses and exhibit distance dependence. We characterize equilibrium spatial patterns of externality-generating and -receiving land uses on a two-dimensional lattice with noncooperative, profit-maximizing producers. In equilibrium, generators or recipients form one or more neighborhoods with certain geometric properties, depending on how an externality dissipates with distance and whether there is an externality generated outside the region's boundaries. Efficient land-use arrangements maximize social welfare subject to the implementability constraints stipulating that no...

Product Origin and Reputation for Quality: the Case of Organic Foods

Palavras-chave: Graph partitioning; Land-use arrangement; Spatial externality; Supermodular game; Land Economics/Use.

Ano: 2004

URL: http://purl.umn.edu/18501

Pozo, Veronica F.; Saak, Alexander E.; Hanawa-Peterson, Hikaru.

Replaced with revised version of paper 12/30/09.

Groundwater Pumping by Heterogeneous Users

Palavras-chave: Agribusiness; Demand and Price Analysis; Industrial Organization.

Ano: 2009

URL: http://purl.umn.edu/49503

Saak, Alexander E.; Peterson, Jeffrey M..

Farm size is a significant determinant of both groundwater irrigated farm acreage and groundwater irrigation application rates per acre. This paper analyzes the patterns of groundwater exploitation when resource users in the area overlying a common aquifer are heterogeneous. In the presence of user heterogeneity, the common resource problem consists of inefficient dynamic and spatial allocation of groundwater because it impacts income distribution not only across periods but also across farmers. Under competitive allocation, smaller farmers pump groundwater faster if farmers have a constant marginal periodic utility of income. However, it is possible that larger farmers pump faster if the Arrow-Pratt coefficient of relative risk-aversion is sufficiently...

Dynamic Informative Advertising of New Experience Goods

Palavras-chave: Common property resource; Groundwater; Majorization; Resource /Energy Economics and Policy.

Ano: 2007

URL: http://purl.umn.edu/9798

This paper analyzes the optimal informative advertising and price policies of a monopolist who sells a new experience good over time to a population of heterogeneous buyers. Under certain conditions, the advertising rate first increases and then decreases over the marketing cycle with a peak occurring at the end of the introductory period when prices are low. Advertising lowers introductory prices but also shortens the period during which they are offered. Advertising raises the share of consumers who know their valuation in the long-run but not necessarily in the short-run

SPATIAL ARRANGEMENTS OF EXTERNALITY GENERATING AND RECEIVING ACTIVITIES

Palavras-chave: Monopoly; Private Information; Consumer Learning; Informative Advertising; Consumer/Household Economics; Industrial Organization; Marketing.

Ano: 2010

URL: http://purl.umn.edu/61326

Many cases of externalities in agricultural production such as pesticide drift, cross-pollination, and offensive odors are attributable to the incompatibility of neighboring land uses. This paper offers an examination of when an efficient activity arrangement is compatible with free-market incentives. Also, free-market and socially efficient activity arrangements are characterized in terms of spatial concentration of the externality generating uses.

IDENTITY PRESERVATION AND FALSE LABELING IN THE FOOD SUPPLY CHAIN

Palavras-chave: Externality; Graph partitioning; Land-use arrangement; Spatial concentration; Resource /Energy Economics and Policy.

Ano: 2003

URL: http://purl.umn.edu/18525

The paper addresses two issues pertaining to the market differentiation between non-genetically modified (non-GM) and genetically modified (GM) food varieties. First, a cost-efficiency explanation is given for the discrepancy between the observed shares of identity preserved non-GM variety and the total supply of the variety. Second, the analysis shows that when products can be falsely labeled as non-GM, the share of false labeling depends on the level of identity preservation. In this context, the analysis demonstrates that the share of falsely labeled supply can increase in response to harsher fines.

SPATIAL PRODUCTION CONCENTRATION UNDER YIELD RISK AND RISK AVERSION

Palavras-chave: Food Consumption/Nutrition/Food Safety.

Ano: 2002

URL: http://purl.umn.edu/18614

A study of equilibrium acreage allocation decisions at the farm and regional levels under risk aversion, yield uncertainty, and endogenous crop prices is undertaken in a two-crop, two-region setting. The main insight is that a partial specialization in one crop at a regional level may be an equilibrium dominant strategy relative to the more diversified crop mix produced on farm. This is due to the trade-offs among the effects of the "natural hedge" based on the negative price-yield correlation on the probability distributions of crop revenues and whole-farm revenue risk reduction through crop enterprise diversification. Another finding is that equilibrium in which each region grows only one crop is unlikely unless there are comparative advantages in...

ON THE DEMAND FOR A STATE-CONTINGENT, COST-SAVING SEED TRAIT

Palavras-chave: Land allocation; Spatial yield dependence; Supermodular order; Industrial Organization.

Ano: 2004

URL: http://purl.umn.edu/18488

Hennessy, David A.; Saak, Alexander E..

Biotechnology has enriched the strategy set available to crop managers. Suppose a manager faces a decision between applying a pre-emergence pesticide or applying nothing at all. The advent of pesticide tolerance traits in plants admits the possibility of a state-contingent post-emergence application of pesticide. The innovation adds value in large part because it provides the manager with the option to wait for more information. For heterogeneous acre types, the determinants of trait royalties and of crop management strategies in equilibrium are studied. Pest resistance traits have different implications for crop management. Whereas a tolerance trait likely complements information technologies, the addition of a resistance trait may substitute for them.

Dynamic Informative Advertising of New Experience Goods

Palavras-chave: Genetic trait; Information inputs; Patent value; Real option; Crop Production/Industries.

Ano: 2002

URL: http://purl.umn.edu/18515

This paper analyzes the optimal advertising and price policies of a monopolist who sells a new experience good over time to a population of heterogeneous forward-looking buyers. We consider informative advertising that can complement or substitute for learning-by-purchasing, and show that the advertising intensity always peaks during the early stages when the price extracts surplus from the buyers who are yet to learn their valuation for the good. We also show that even though informative advertising may temporarily raise prices and slow down the learning process, an advertising ban can reduce welfare.

PLANTING DECISIONS AND UNCERTAIN CONSUMER ACCEPTANCE OF GENETICALLY MODIFIED CROP VARIETIES

Palavras-chave: Monopoly; Advertising; Experience Goods; Learning; Private Information; Agribusiness; Agricultural and Food Policy; Demand and Price Analysis; Industrial Organization; Marketing.

Ano: 2011

URL: http://purl.umn.edu/103536

Saak, Alexander E.; Hennessy, David A..

There exists much uncertainty about consumer attitudes towards genetically modified foods. If it happens that sufficient (insufficient) acres are planted under non-modified seed to meet post-harvest demand, then a price premium will not (will) emerge for the non-modified varieties. A non-linearity originates in the fact that a price premium may be supported. This non-linearity interacts with the extent of demand uncertainty to determine equilibrium varietal plantings and the probability that post-harvest varietal prices will differ. Also, as planting approaches signals will be received by growers about the nature of demand they will be planting into. We show how the non-linearity affects the order on the types of signals that risk-neutral growers will...

SPATIAL PRODUCTION CONCENTRATION, DEMAND UNCERTAINTY, AND MULTIPLE MARKETS

Palavras-chave: Consumer/Household Economics; Crop Production/Industries.

Ano: 2001

URL: http://purl.umn.edu/20581

The geographic concentration of production of main field crops in several growing regions is a distinctive feature of U.S. agriculture. Among many possible reasons for spatial concentration, I study here the effects of the distribution of end users and terminal markets on acreage allocation. The presence of multiple terminal markets in a growing area may allow for a more flexible marketing plan, along with introducing more idiosyncratic demand uncertainty associated with each consumption point. To take better advantage of future marketing opportunities, growers, depending on their location relative to terminal markets, may adjust the crop mix produced on the farm. I characterize the types of environments that lead to a spatial production concentration of a...

ON THE PREMIUM FOR REVENUE INSURANCE UNDER JOINT PRICE AND YIELD RISK

Palavras-chave: Commodity prices; Location; Marketing; Production concentration; Supermodularity; Systematic risk; Industrial Organization.

Ano: 2003

URL: http://purl.umn.edu/18557

This note provides two results pertaining to the pricing of agricultural revenue insurance contracts under joint price and yield risk. First, a weakening of the concordance ordering is used to sign the effect of greater dependence between the multiplicative risks (price and yield) on the expected indemnity payment. Second, sufficient conditions are found when the premium rate for revenue insurance is smaller (greater) than the premium for the corresponding single risk (price or yield) insurance.

LOCATION, LAND QUALITY, AND RENTAL VOLATILITY

Palavras-chave: Concordance order; Revenue insurance; Risk and Uncertainty.

Ano: 2004

URL: http://purl.umn.edu/18324

Saak, Alexander E.; Hennessy, David A..

It appears to be widely believed that returns on low quality land are more variable than on high quality land. Using Ricardian rent as the measure of returns and sensitivity to output price as the measure of volatility, we investigate this null hypothesis for three different measures of quality. These are proximity to market, output productivity, and cost efficiency. In all cases, we identify precise conditions on the production technology such that rental volatility varies in a monotone manner with land quality. A method of econometric investigation of the relationship between rental volatility and land quality is developed and applied to Iowa cash rents data collected during 1994-2000. Our preliminary findings provide partial empirical support for...

A Model of Labeling with Horizontal Differentiation and Cost Variability

Palavras-chave: Land Economics/Use.

Ano: 2001

URL: http://purl.umn.edu/20747

We study optimal disclosure of variety by a multi-product firm with random costs. In our model there are two varieties that are horizontally differentiated and differ in overall quality, but buyers cannot distinguish between them without labels. The equilibrium prices for labeled varieties are increasing functions of the absolute value of the cost differential and do not reveal which variety is cheaper to produce. Nondisclosure is most common when there is moderate uncertainty about the relative input cost, not too much idiosyncrasy in consumer valuations, and not too much difference in quality across varieties. Although mandatory disclosure of variety benefits consumers, it decreases expected welfare when relative input cost variability is large and...

Country of Origin Labeling with Horizontal Differentiation and Cost Variability

Palavras-chave: Agribusiness; Agricultural and Food Policy; Food Consumption/Nutrition/Food Safety; Industrial Organization; Marketing; Information; Labeling; Quality disclosure; Product differentiation.

Ano: 2011

URL: http://purl.umn.edu/103540

This paper studies whether a seller achieves higher profits by providing consumers with information that allows them to distinguish between products from different countries, and how mandatory provision of such information impacts welfare. We analyze a model of multi-product monopoly with horizontal differentiation and random country-specific input costs. We find that if the variability in the input costs is sufficiently high and the share of consumers with high valuations is in some intermediate range, the seller prefers to withhold information about product origin. Mandatory labeling of products with their country of origin may reduce or increase welfare depending on the share of consumers with high valuations. We also discuss extensions of the basic...

LOCATION, PLANTING DECISIONS, AND THE MARKETING OF QUALITY-DIFFERENTIATED AGRICULTURAL COMMODITIES

Palavras-chave: Country of origin labeling; Consumer learning; Food policy; Agricultural and Food Policy; Industrial Organization; International Relations/Trade.

Ano: 2010

URL: http://purl.umn.edu/61328

In a marketing environment, the demand conditions, the costs of shipping and storing grain varieties, the interest rate on farm loans, and the distribution of cropland in the area are important determinants of growers' planting decisions. In this article, I focus on a market for two quality-differentiated agricultural commodities: one produced with the use of biotechnology and the other, without. I develop a model for analyzing the equilibrium planting and marketing decisions made by geographically dispersed producers during the marketing year following harvest. I identify the types of marketing environments leading to a greater concentration of equilibrium acreage planted to a particular grain variety near the market and investigate the effects of the...

State-Contingent Demand for Herbicide-Tolerance Seed Trait

Palavras-chave: Commodity prices; Grain storage; Location; Marketing; Product quality; Supermodularity; Crop Production/Industries.

Ano: 2003

URL: http://purl.umn.edu/18427