Market-level Analysis Research Articles

Taxes and quality: A market–level analysis

A conventional assumption of product homogeneity when the commodity of interest is actually heterogeneous will lead to errors in an analysis of the incidence of policies, such as taxes. In this article, an equilibrium displacement model is used to derive analytical solutions for price, quantity, and quality effects of ad valorem and per unit taxes. The results show how parameters determine the effects of tax policies on quality. The potential for tax–induced distortions in quality, and the distributive consequences of those distortions, are illustrated in a case study of the market for Australian wine.

Taxes and Quality: A Market-Level Analysis

A conventional assumption of product homogeneity when the commodity of interest is actually heterogeneous will lead to errors in an analysis of the incidence of policies, such as taxes. In this article, an equilibrium displacement model is used to derive analytical solutions for price, quantity, and quality effects of ad valorem and per unit taxes. The results show how parameters determine the effects of tax policies on quality. The potential for tax-induced distortions in quality, and the distributive consequences of those distortions, are illustrated in a case study of the market for Australian wine.

Price and Welfare Effects of Catastrophic Forest Damage From Southern Pine Beetle Epidemics

Abstract Southern pine beetle (Dendroctonus frontalis) epidemics are periodically responsible for catastrophic levels of mortality to southern yellow pine forests. Traditional forest damage appraisal techniques developed for site specific economic analysis are theoretically weak since they do not consider aggregate impacts across ecosystems and related markets. Because the traditional model estimates losses only to producers with damaged forests, it provides misleading information from a distributional standpoint by ignoring impacts on producers with undamaged forests and timber consumers. An economic model of timber supply and demand is introduced and used to develop a new technique for estimating short-run market level impacts of catastrophic forest damages. The null hypothesis that catastrophic disruption of forest ecosystem production has no effect on timber markets is tested using intervention analysis and data on the recent Texas-Louisiana epidemic. Parameter estimates are used to compute short-run changes in economic welfare for producers on damaged forests, producers on undamaged forests, and timber consumers. Principal findings are: (1) changes in social welfare resulting from catastrophic damage to standing timber across forest ecosystems requires market-level analysis, and (2) the net change in economic welfare resulting from insect epidemics is unambiguously negative. For. Sci. 37(2):500-516.