Agricultural Markets And Prices

by Hudson, Darren

• ISBN13: 9781405136679
• ISBN10: 1405136677
• Edition: 1st
• Format: Hardcover
• Copyright: 2006-10-30
• Publisher: Wiley-Blackwell

Summary

This text incorporates new information and devotes more time and space to the issues of agricultural industrialization and market structure likely to be faced by applied economists. Responds to a critical need to train students to work in the new world of agricultural markets Explicitly integrates empirical analysis of issues while maintaining the theoretical and practical issues of applied market analysis Places a high emphasis on market structure, imperfect competition, vertical coordination, contracting, etc., providing students with the necessary background to understand the new environment in which they will be expected to operate Includes some introduction to game theory with applications Contains practical examples, "key questions", exercises, and questions posed to students that can be used by instructors to stimulate classroom discussion.

Author Biography

Darren Hudson is Professor of Agricultural Economics at Mississippi State University. He is currently Fellow for The Farm Foundation studying issues of globalization in agriculture, and has also served as Chair of the Food and Agricultural Marketing Policy Section of the American Agricultural Economics Association.

Table of Contents

Preface	xi
Acknowledgments	xiii
Introduction	1	(1)
The Agricultural Economy	1	(3)
A Note on Indices	4	(2)
The Organization of the Book	6	(3)
Part I Models and Analysis of Perfectly Competitive Markets	9	(136)
Market Demand	11	(27)
Basic Demand Theory	11	(10)
Utility Maximization	12	(2)
Income and Substitution Effects of Price Changes	14	(2)
Deriving a Demand Function	16	(5)
Demand Elasticities	21	(5)
Arc Price Elasticity of Demand	21	(1)
Point Elasticity of Demand	22	(1)
Cross-Price and Income Elasticities	22	(2)
Interpretation of Elasticities	24	(1)
Units of Measure on Elasticity	24	(1)
Elasticity and Total Revenue	25	(1)
Derived Demand	26	(2)
Estimating Demand Functions	28	(10)
Empirical Demand Functions and Functional Form	28	(3)
Price-Dependent Demand (Inverse Demand)	31	(1)
Data and Aggregation	31	(1)
Exercises	32	(2)
References	34	(1)
Appendix 1A: Mathematical Treatment of Utility Maximization and Demand Derivation	34	(2)
Appendix 1B: Identification	36	(2)
Market Supply	38	(18)
The Producer	38	(3)
Market Supply	41	(7)
Length of Run	41	(2)
Changes in Supply	43	(5)
Technology Adoption and Supply Adjustment	48	(2)
Measuring Supply	50	(6)
Exercises	51	(1)
References	52	(1)
Appendix 2A: Cost Function	53	(1)
Appendix 2B: Profit Maximization	54	(2)
The Market	56	(12)
Competitive Equilibrium	57	(2)
The Equilibrium Concept	57	(1)
An Example Equilibrium Derivation	58	(1)
Impacts of Changes	59	(3)
Graphical Analysis	59	(2)
A Mathematical Examination of Changes	61	(1)
Producer and Consumer Surplus	62	(5)
The Surplus Concept	62	(2)
Measuring Surplus	64	(3)
Summary	67	(1)
Exercises	67	(1)
References	67	(1)
Marketing Margins	68	(14)
Defining Marketing Margins	68	(3)
Price Differences	69	(1)
Marketing Costs	70	(1)
Marketing Costs and Size of Margins	71	(2)
The Impacts of Marketing Margin Changes on Producers and Consumers	73	(3)
The Effects of Cost Structure	73	(2)
Added Services	75	(1)
The Incidence of Margin Changes	75	(1)
The Farmer's Share of the Retail Dollar	76	(2)
Measuring Marketing Margins	78	(2)
Mark-Up Models	78	(1)
Margin Models	79	(1)
Summary	80	(2)
Exercises	81	(1)
References	81	(1)
Stocks and International Markets	82	(13)
Storable versus Nonstorable Products	82	(4)
Price Determination without Stocks	82	(1)
The Impacts of Stocks on Price	83	(2)
Demand for Stocks	85	(1)
Summary	86	(1)
Exports and Imports	86	(7)
Export and Import Demand	87	(4)
Exchange Rates	91	(2)
Equilibrium Revisited	93	(1)
Summary	93	(2)
Exercises	94	(1)
References	94	(1)
Price Variation Across Space	95	(9)
The Law of One Price	95	(5)
Arbitrage	95	(1)
Transfer Costs and Market Boundaries	96	(2)
Spatial Markets	98	(2)
Spatial Equilibrium Models	100	(2)
Summary	102	(2)
Exercises	102	(1)
References	103	(1)
Price Variation Through Time	104	(20)
Trends	104	(7)
Trend Analysis	106	(1)
Moving Averages	107	(4)
Seasonality	111	(2)
Normal Backwardation	112	(1)
Price Forecasting	113	(8)
Forecasting Basics	113	(2)
Distributed-Lag Models	115	(5)
Out-of-Sample Forecasts	120	(1)
Summary	121	(3)
Exercises	122	(1)
References	123	(1)
Product Quality	124	(9)
The Impacts of Quality on Price	124	(3)
Observability	124	(1)
Utility Differences	125	(2)
Product Marketing and Quality	127	(1)
Estimation	127	(4)
Data and Model	127	(2)
Functional Form	129	(1)
Other Issues	130	(1)
Summary	131	(2)
References	131	(2)
Futures Markets	133	(12)
Futures Markets and Exchanges	133	(2)
A Brief History	133	(1)
The Roles of Futures Markets	134	(1)
Basic Institutions and Mechanisms	135	(4)
Institutions and Governance	135	(1)
Trading Mechanisms and Definitions	136	(3)
Hedging	139	(1)
Options	140	(3)
Options Defined	140	(2)
Why Use Options?	142	(1)
Summary	143	(2)
Exercises	143	(1)
References	144	(1)
Part II Imperfect Competition, Market Structure, and Market Analysis	145	(48)
Monopoly	147	(9)
Monopoly Structure and Pricing	147	(3)
Optimal Pricing	148	(1)
Restraints on Monopoly	149	(1)
Welfare Implications of Monopoly	149	(1)
Price Discrimination	150	(4)
Summary	154	(2)
Exercises	154	(1)
References	155	(1)
Strategic Interaction	156	(6)
The Prisoner's Dilemma	156	(2)
Games with Mixed Strategies	158	(1)
Sequential Bargaining	158	(2)
Summary	160	(2)
References	160	(1)
Appendix 11A: Normal-Form Representation	161	(1)
Imperfect Competition	162	(12)
Pricing and Behavior	163	(3)
Duopsony/Oligopsony	166	(2)
Strategic Behavior	168	(1)
Empirical Analysis	169	(2)
Market Concentration	169	(2)
New Empirical Industrial Organization	171	(1)
Summary	171	(3)
Exercises	171	(1)
References	172	(1)
Appendix 12A: The Conjectural Variations Model	173	(1)
Vertical Coordination and Contracting in Agriculture	174	(19)
Defining Transactions	174	(2)
Governance Structure	176	(7)
The Importance of Governance Structure	176	(2)
The Determination of Governance Structure	178	(5)
Contracts	183	(10)
Adverse Selection	184	(1)
Moral Hazard	185	(1)
Contract Length	185	(1)
Complete versus Incomplete Contracts	186	(2)
References	188	(1)
Appendix 13A: Price Discrimination in Steak Attributes	188	(5)
Part III Advanced Techniques with Surveys and Experimental Economics	193	(40)
The Basics of Survey Design	195	(13)
Sample Selection	195	(4)
Random and Nonrandom Samples	195	(2)
Sample Size	197	(2)
Questionnaire Design	199	(5)
Defining the Problem and Questions	199	(2)
Economizing for Multiple Objectives	201	(1)
Questionnaires and Response Rates	201	(2)
Ethical Considerations	203	(1)
Survey Administration	204	(2)
Pre-Testing	204	(1)
Mail, Phone, and Personal Interviews	204	(2)
Data Collection and Record-Keeping	206	(1)
Summary	206	(2)
References	207	(1)
Individual Utility Estimation and Conjoint Analysis	208	(13)
Consumer Choices	208	(1)
Conjoint Analysis	209	(6)
Choice Sets	210	(1)
Experimental Design	211	(1)
Estimation	212	(3)
Alternative Choice Models	215	(4)
Contingent Valuation	215	(3)
Ordered Models	218	(1)
Summary	219	(2)
References	220	(1)
Experimental Methods	221	(12)
Experiments as a Research Device	221	(1)
Experimental Markets	222	(3)
The Double-Oral Auction	223	(1)
Posted-Offer Markets	224	(1)
Auctions	225	(5)
Auction Type	225	(3)
Issues to Consider	228	(1)
Example	229	(1)
Summary	230	(3)
References	230	(3)
Index	233