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STOCHASTIC TECHNOLOGY, RISK PREFERENCES AND ADOPTION OF SITE-SPECIFIC TECHNOLOGIES AgEcon
Isik, Murat; Khanna, Madhu.
This paper develops a model of farmer decision-making to examine the extent to which uncertainties about the performance of site-specific technologies (SSTs) and about the weather impact the value of these technologies. The model uses the jointly estimated risk and technology parameters to examine the impacts of SSTs on returns and nitrogen pollution. The availability of uncertain soil information and production uncertainty can lead risk-averse farmers to apply more fertilizers and generate more pollution. Ignoring the impact of uncertainty and risk preferences of farmers leads to a significant overestimation of the economic and environmental benefits of SSTs and underestimation of the required subsidy for inducing adoption of SSTs. The model that accounts...
Tipo: Conference Paper or Presentation Palavras-chave: Spatial variability; Risk preferences; Joint estimation; Uncertainty; Technology adoption; Nitrogen runoff; Research and Development/Tech Change/Emerging Technologies.
Ano: 2002 URL: http://purl.umn.edu/19858
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The Quality-Quantity Trade-off in the Principal-Agent Framework AgEcon
Olmos, Marta Fernandez; Martinez, Jorge Rosell.
This paper uses the principal-agent theory to analytically investigate the optimal incentive-based compensation contract that a processor should offer to a grower performing efforts in quantity and quality. In this process, we contribute to the substantive literature on multi-task principal-agent models by analyzing the quality-quantity trade-off and studying the implications of such a relationship in the principal-agent framework. One striking result of these effects is that, under appropriate incentive-based grower’s compensation, the processor may encourage grower’s effort in quality without crowding out grower’s effort in quantity.
Tipo: Article Palavras-chave: Quality; Quantity; Trade-off; Incentive contract; Principal-agent framework; Uncertainty; Agribusiness; Agricultural and Food Policy; D86.
Ano: 2011 URL: http://purl.umn.edu/118578
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REGULATING ENVIRONMENTAL THREATS AgEcon
Tsur, Yacov; Zemel, Amos.
Environmental consequences of natural resource exploitation often entail threats of future occurrences of detrimental abrupt events rather than (or in addition to) inflicting a damage gradually. The possibility of abrupt occurrence of climate-change related calamities is a case in mind. The uncertainty associated with the realization of these threats and their public-bad nature complicate the determination of optimal economic response. We analyze the regulation of such environmental threats by means of a Pigouvian hazard tax, based on the shadow cost of the hazard-generating activities. A numerical example illustrates possible effects of the proposed regulation scheme.
Tipo: Working or Discussion Paper Palavras-chave: Environmental events; Emission; Climate change; Regulation; Pigouvian tax; Hazard rate; Uncertainty; Environmental Economics and Policy; H23; H41; O13; Q54; Q58.
Ano: 2006 URL: http://purl.umn.edu/7150
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Livestock Gross Margin Insurance for Dairy Cattle: An Analysis of Program Performance and Cost under Alternative Policy Configurations AgEcon
Cabrera, Victor E.; Gould, Brian W.; Valvekar, Mayuri.
Livestock Gross Margin insurance for dairy cattle (LGM-Dairy) is a risk management tool that can be used to insure a lower bound on a dairy producer’s gross margin. In this paper we (1) review the basic structure of LGM-Dairy (2) examine the sensitivity of Gross Margin Guarantee (GMG) and premium to changes in feeding regimes and (3) quantify impacts of changes in deductible level on important program characteristics.
Tipo: Conference Paper or Presentation Palavras-chave: Dairy Price Risk; Uncertainty; Livestock Insurance.; Agribusiness; Farm Management; Financial Economics; Livestock Production/Industries; Production Economics; Risk and Uncertainty.
Ano: 2009 URL: http://purl.umn.edu/49262
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WELFARE MEASUREMENT UNDER THREATS OF ENVIRONMENTAL CATASTROPHES AgEcon
Tsur, Yacov; Zemel, Amos.
Welfare measures under threats of environmental catastrophes are studied using the "“parable”" apparatus of Weitzman and Lofgren [22]. The occurrence probability of the catastrophic event is driven (at least partly) by anthropogenic activities such as natural resource exploitation. Without external effects, the green NNP is a genuine welfare measure vis-à-vis a particular parable economy. Often, however, the occurrence hazard constitutes a public bad, treated as an externality by agents who ignore their own contribution to its accumulation. In such cases the green NNP, although accounting for the event hazard rate per se, fails to properly internalize future effects on the hazard rate of current economic activities and as a result overestimates welfare....
Tipo: Working or Discussion Paper Palavras-chave: Green NNP; Environmental catastrophes; Hazard rate; Uncertainty; Environmental Economics and Policy.
Ano: 2005 URL: http://purl.umn.edu/14987
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Advanced Biofuel Production in Louisiana Sugar Mills: an Application of Real Options Analysis AgEcon
Darby, Paul M.; Mark, Tyler B.; Detre, Joshua D.; Salassi, Michael E..
In order to more fully study the risks and uncertainty involved in cellulosic ethanol production, we examine a simulated plant in South Louisiana using Real Options Analysis
Tipo: Conference Paper or Presentation Palavras-chave: Real options; Risk; Uncertainty; Cellulosic ethanol; Energy cane; Sorghum; Bagasse; Simulation; Agribusiness; Agricultural Finance; Production Economics; Resource /Energy Economics and Policy; Risk and Uncertainty; Q42; Q14; Q16; D81; G31.
Ano: 2011 URL: http://purl.umn.edu/103747
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AGRICULTURAL POLICY UNCERTAINTY AND ANTICIPATORY FIRM LEVEL ADJUSTMENTS AgEcon
Lagerkvist, Carl Johan.
This paper investigates, through a dynamic stochastic adjustment model the extent to which an active agricultural policy can be the source of volatility in agricultural investment. It is shown that noise in formulation of agricultural policy has adverse effects even in cases where earlier results would take that investment is increased.
Tipo: Conference Paper or Presentation Palavras-chave: Uncertainty; Agricultural Policy; Investment; Agricultural and Food Policy; Financial Economics; Risk and Uncertainty; D8; E2; H20; Q18.
Ano: 2000 URL: http://purl.umn.edu/21734
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Impact of Farm Size and Uncertainty on Technology Disadoption AgEcon
Gedikoglu, Haluk.
For policies that promote use of new technologies by farmers to be successful, it is important that farmers continue to use these technologies. Technology disadoption has not been analyzed in the literature widely and there is no theoretical model that analyzes technology disadoption. The objective of the current study is to provide a theoretical framework that explains the impact of farm size and uncertainty with respect to production technology on farmers’ decision to disadopt a new technology. Current study found that a negative relationship between farm size and disadoption technologies that were complement to other technologies that are used by larger farms. Also, the current study predicted that larger farmers are more likely to disadopt a new...
Tipo: Conference Paper or Presentation Palavras-chave: Technology Disadoption; Farm Size; Uncertainty; Environmental Quality; Environmental Economics and Policy.
Ano: 2010 URL: http://purl.umn.edu/56431
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Water use and salinity in the Murray–Darling Basin: A state-contingent model AgEcon
Adamson, David; Mallawaarachchi, Thilak; Quiggin, John C..
The supply of water for irrigation is subject to climatic and policy uncertainty. The object of the present paper is to show how the linear and non-linear programming models commonly used in modelling problems such as those arising in the Murray–Darling Basin may be adapted to incorporate a state-contingent representation of uncertainty. Estimates showing the potential value of improved water use are also derived.
Tipo: Journal Article Palavras-chave: Irrigation; Salinity; Uncertainty; Resource /Energy Economics and Policy.
Ano: 2007 URL: http://purl.umn.edu/118332
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Are CAP Decoupling Policies Really Production Neutral? AgEcon
Katranidis, Stelios D.; Kotakou, Christina A..
This paper examines the effects of decoupling policies on Greek cotton production. We estimate a system of cotton supply and input derived demand functions under the hypothesis that producers face uncertainty about prices. Using our estimation results we simulate the effects on cotton production under four alternative policy scenarios: the ‘Old’ CAP regime (i.e. the policy practiced until 2005), the Mid Term Review regime, a fully decoupled policy regime and a free trade-no policy scenario. Our results indicate that cotton production gradually decreases as more decoupled policies are adopted. Moreover, the fully decoupled payment is found to be non-production neutral since it indirectly affects producers’ decisions through the wealth effect.
Tipo: Conference Paper or Presentation Palavras-chave: CAP; Decoupling; Uncertainty; Agricultural and Food Policy.
Ano: 2008 URL: http://purl.umn.edu/44184
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Dynamic and stochastic analysis of environmental and natural resources AgEcon
Tsur, Yacov; Zemel, Amos.
Uncertainty enters the dynamic tradeoffs of environmental and natural resource management in a variety of ways and forms. In this chapter we review the various sources of uncertainty, the methodologies developed to account for them and implications regarding management of environmental and natural resources.
Tipo: Article Palavras-chave: Resource management; Environmental policy; Uncertainty; Catastrophic events; Irreversibility.; Environmental Economics and Policy; Resource /Energy Economics and Policy; Risk and Uncertainty.
Ano: 2012 URL: http://purl.umn.edu/120017
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The Equivalence of Strict Liability and Negligence Rule: A « Trompe l'œil » Perspective AgEcon
Gerard, Mondello.
This paper analyzes the difficulties of comparing the respective effectiveness of two among the most important liability regimes in tort law: rule of negligence and strict liability. Starting from the standard Shavellian unilateral accident scheme, I show that matching up liability regime on their capacity to provide the highest level of safety is ineffective. This demonstration lies on two components. The first one gathers some results drawn from literature that introduces uncertainty. The second one takes into consideration the beliefs of agents and their aversion to ambiguity. The model applies uncertainty to the level of maximum damage. This demonstration reinforces the previous result. Hence, both regimes apply on specific tort question and comparing...
Tipo: Working Paper Palavras-chave: Strict Liability; Negligence Rule; Ambiguity Theory; Uncertainty; Accident Model; Risk and Uncertainty; K0; K32; Q01; Q58.
Ano: 2012 URL: http://purl.umn.edu/121910
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Modelos de valoracion en ambiente de incertidumbre AgEcon
Bellver, Jeronimo Aznar; Martinez, Francisco Guijarro.
Resumen En este trabajo se presentan diversos modelos de valoración en ambiente de incertidumbre que combinan información precisa e imprecisa. En el desarrollo de los mismos se ha extendido la técnica de programación por metas básica a modelos que permiten considerar intervalos en la expresión del precio o las variables explicativas del mismo, enunciando una serie de proposiciones con las que se obtiene un completo conocimiento sobre el grado de adecuación entre los valores observados en el precio y los valores estimados por la función de valoración. Así mismo, se ha formulado un índice de adecuación que permite comparar diferentes modelos obtenidos mediante la metodología propuesta. Palabras clave: Valoración, Incertidumbre, Programación por metas con...
Tipo: Journal Article Palavras-chave: Valuation; Uncertainty; Interval goal programming; Research Methods/ Statistical Methods; C61; G12; Q14.
Ano: 2004 URL: http://purl.umn.edu/28731
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DIMENSIONES CULTURALES EN LA EMPRESA ESTATAL DE AUTOSERVICIO, SUCURSAL DELICIAS, CHIHUAHUA AgEcon
Quiroz Guzman, Tamara; Valtierrez Angel, David Arnoldo.
The branch of the supermarkets is seen threatened each day by radical changes and sometimes involuntary those which should be faced in a way practical and direct as if is tried to minority problems. Furthermore, as all in the life changes and evolves, the market is not left behind being this obligator to improve their/its continuous improvement strategies to reach the excellence and the permanency before the competition every time but direct. The present study is carried out in the state self-service company in Delicias City, Chihuahua, who requested the one which anonymity devotes to the foods and products marketing for household. It is I accomplished a study that consisted of measuring the cultural dimensions of the groups that meet in Delicias and the...
Tipo: Journal Article Palavras-chave: Cultural dimensions; Uncertainty; Power; Womanliness; Masculinity; Collectivism; Individualism; Society.; Agribusiness.
Ano: 2010 URL: http://purl.umn.edu/93906
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Optimal Farm Size under an Uncertain Land Market: the Case of Kyrgyz Republic AgEcon
Scandizzo, Pasquale Lucio; Savastano, Sara.
The paper illustrates a theoretical model of real option value applied to the problem of land development. Making use of the 1998-2001 Kyrgyz Household Budget Survey, we show that when the hypothesis of decreasing return to scale holds, the relation between the threshold value of revenue per hectare and the amount of land cultivated is positive. In addition to that, the relation between the threshold and the amount of land owned is positive in the case of continuous supply of land and negative when there is discontinuous supply of land. The direct consequence is that, in the first case, smaller farms will be more willing to rent land and exercise the option where, in the second case, larger farms will exercise first. The results corroborate the findings of...
Tipo: Conference Paper or Presentation Palavras-chave: Option value theory; Farm size; Uncertainty; Irreversibility; Agricultural and Food Policy; Land Economics/Use; Resource /Energy Economics and Policy; O13; Q12; Q15; Q18.
Ano: 2009 URL: http://purl.umn.edu/52844
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The complexities in environmental decision-making for the Murray-Darling Basin AgEcon
Schrobback, Peggy; Mallawaarachchi, Thilak; Quiggin, John C..
People are part of a complex natural system and have the ability to actively interfere with their environment. Collective decisions made by governments represent social rules that limit the extent of people's interference with the environment that support them. Environmental decisions made by governments usually carry an ethical bias and are limited by the perception of the risks and uncertainties that may affect society's well-being in the medium to long run. The recently published Guide to the proposed Basin Plan represents a draft for a legislative instrument that aims to reclaim some of the water back onto the environment to safeguard declining natural ecosystems in the Murray-Darling Basin. By limiting diversions into agricultural uses, irrigators in...
Tipo: Conference Paper or Presentation Palavras-chave: Environmental decision-making; Uncertainty; Risk; Trade-off; Collective choices; Resilience; Murray-Darling Basin; Environmental Economics and Policy; Political Economy; Public Economics; Resource /Energy Economics and Policy.
Ano: 2011 URL: http://purl.umn.edu/100708
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Integrating economic values and catchment modelling AgEcon
Kragt, Marit Ellen; Bennett, Jeffrey W..
Integrated catchment policies are widely used to manage natural resources in Australian catchments. Decision support tools available to aid integrated catchment management are often limited in their integration of environmental processes with socio-economic systems. Fully integrated models are required to support assessments of the environmental and economic trade-offs of catchment management changes. A Bayesian Network (BN) model is demonstrated to provide a suitable approach to integrate environmental modelling with economic valuation. The model incorporates hydrological, ecological and economic models for the George catchment in Tasmania. Information about the non-market costs and benefits of environmental changes is elicited using Choice Experiments,...
Tipo: Conference Paper or Presentation Palavras-chave: Integrated catchment modelling; Bayesian networks; Uncertainty; Environmental values; Non-market valuation; Choice Modelling..
Ano: 2009 URL: http://purl.umn.edu/47956
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Climate Policy Design under Uncertainty AgEcon
Pizer, William A..
The uncertainty surrounding both costs and benefits associated with global climate change mitigation creates enormous hurdles for scientists, stakeholders, and decision-makers. A key issue is how policy choices balance uncertainty about costs and benefits. This balance arises in terms of the time path of mitigation efforts as well as whether those efforts, by design, focus on effort or outcome. This paper considers two choices-price versus quantity controls and absolute versus relative/intensity emissions limits-demonstrating that price controls and intensity emissions limits favor certainty about cost over climate benefits and future emissions reductions. The paper then argues that in the near term, this favoritism is desired.
Tipo: Working or Discussion Paper Palavras-chave: Carbon; Climate; Policy; Intensity; Global warming; Uncertainty; Price; Quantity; Environmental Economics and Policy; D81; Q54; Q58.
Ano: 2005 URL: http://purl.umn.edu/10584
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Uncertain Climate Policy and the Green Paradox AgEcon
Smulders, Sjak; Tsur, Yacov; Zemel, Amos.
Unintended consequences of announcing a climate policy well in advance of its implementation have been studied in a variety of situations. We show that a phenomenon akin to the so-called “Green- Paradox” holds also when the policy implementation date is uncertain. Governments are compelled, by international and domestic pressure, to demonstrate an intention to reduce greenhouse gas emissions. Taking actual steps, such as imposing a carbon tax on fossil energy, is a different matter altogether and depends on a host of political considerations. As a result, economic agents often consider the policy implementation date to be uncertain. We show that in the interim period between the policy announcement and its actual implementation the emission of green-house...
Tipo: Working or Discussion Paper Palavras-chave: Climate policy; Carbon tax; Uncertainty; Green paradox; Environmental Economics and Policy; Resource /Energy Economics and Policy.
Ano: 2010 URL: http://purl.umn.edu/93129
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The Paradox of Risk Balancing: Do Risk-reducing Policies Lead to More Risk for Farmers? AgEcon
Cheng, Mei-luan; Gloy, Brent A..
The study presents stochastic optimal control/dynamic programming (SOC/DP) to derive the optimal debt level and consumption in farm models concerning two sources of uncertainty: the return on assets and interest rate. The SOC/DP analytic framework is used to analyze the impacts of risk-reducing farm policies on farm’s financial and risk adjustments. The results show the violations of the risk-balancing concept, which theorizes that risk-reducing farm policies may lead to increases in financial leverage, total risk, and the expected returns. Also, this study examines the extent to which the estimates of the optimal debt level are biased when interest rate risk is ignored.
Tipo: Conference Paper or Presentation Palavras-chave: Stochastic Optimal Control/Dynamic Programming; Financial Leverage; Uncertainty; Risk Balancing; Agricultural and Food Policy; Risk and Uncertainty.
Ano: 2008 URL: http://purl.umn.edu/6546
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