Output Market Research Articles

R&D INVESTMENTS AS PREBARGAINING STRATEGIES

This paper analyzes a semicollusive, differentiated duopoly. Firms first compete in cost reducing R&D and then cooperate on the output market. The sharing of the joint profit on the output market is modeled as a Nash bargaining game. We study an asymmetric setting in which one firm has a lower unit cost of production than the other firm, before any R&D expenditures. If firms do not agree on how to share their joint profit, they play a noncooperative Nash equilibrium. Assuming linear demand functions, we show that the Nash bargaining outcome is independent of whether firms play a Cournot or a Bertrand Nash equilibrium, as long as both firms supply positive outputs in these equilibria. If the two products are sufficiently differentiated, there is a unique equilibrium in which both firms supply a positive output, and in which the low cost firm always invests more in R&D than the high cost firm. If the two products are not very differentiated, and if the difference in unit costs between the two firms is not too large, there exist two equilibria. In each of these equilibria only one firm supplies a positive output. This can be the low cost or the high cost firm. In the latter case, the initially high cost firm invests so much in R&D that its unit cost after R&D is lower than that of the other firm. This firm then leapfrogs the other firm. If the two products are very similar and if firms apply Bertrand strategies when disagreeing, there exist equilibria in which only one firm supplies a positive output, while in the noncooperative Nash equilibrium that same firm can prevent the other firm from entering the market. We show that, in the context of the Nash bargaining model, this latter firm still has the power to claim a share of the joint profit.

Self-Sabotage and Durable-Goods Monopoly

We analyze a simple two-period linear demand durable-goods monopoly model with “self-sabotage.” The firm has the ability to sabotage its own production by increasing its future (period two) manufacturing costs. We find that an uncommitted monopoly seller has an incentive to engage in such self-sabotage, while a committed seller or renter has no such incentive. Unlike the previous papers on self-sabotage, we show this occurs even though the firm faces no rivals in the output market. In our durable-goods setting, the incentive for self-sabotage arises from the seller’s commitment problem with period-one buyers (the so-called Coase conjecture). Interestingly, we also find that this sort of self-sabotage can not only be profit enhancing for the uncommitted firm, but may also increase social welfare (in contrast to the earlier models on self-sabotage.)

Smallholder Supply Response to Marketing Board Activities in a Dual Channel Marketing System: The Case of Zambia

AbstractIn recent years, parastatal grain marketing boards have re‐emerged as important elements of grain markets in eastern and southern Africa, yet little is known about how farmers are responding to their scaled up activities. This article develops a conceptual model of farmers’ production decisions in the context of dual output marketing channels (government and private sector) when output prices at harvest time and the availability of one of the marketing channels are unknown at planting time. It then applies the model to the case of Zambia and uses nationally representative household‐level panel survey data to estimate the effects of the Food Reserve Agency (FRA), the government parastatal maize marketing board, on smallholder crop production and fallow land. The FRA buys maize from smallholders at a pan‐territorial price that typically exceeds market prices in major maize producing areas. Results suggest that increases in the farmgate FRA maize price raise farmer maize price expectations, which induces a supply response. Smallholders respond to an increase in the FRA price by extensifying their maize production. On average, a 1% increase in the FRA price is associated with 0.06% increases in smallholders’ maize area planted and quantity harvested. There is also some evidence that farmers reduce the area of land under fallow in response to FRA incentives but there is no evidence of reductions in the area planted to other crops.

Analyzing the factors affecting the market participation of maize farmers: A case study of small-scale farmers in greater Giyani Local Municipality of the Mopani District, Limpopo Province

The aim of the study was to analyze factors affecting the market participation of small-scale maize farmers in Greater Giyani Municipality. The study hypothesizes that there are no factors affecting market participation in small-scale maize farmers in Greater Giyani. The study used cross-sectional data collected from 92 small-scale maize farmers. The logistic regression model was used to analyze data. The logistic regression results reveals that out of twelve variables considered in the analysis as factors affecting market participation, seven of them were found to be significant, while five of them were insignificant. Gender, farmer’s access to credit, marital status, market information and infrastructure were found to be positively significant, while distance to market and external source of income were negatively significant. Farmers’ level of education and age of a farmer were positively insignificant. Distance to output market, experience in farming and external source of income were negatively related to market participation. The results from the study highlights that government can increase market participation of small-scale maize farmers through encouraging group market participation, upgrading of roads to enable smooth accessibility of farmers to output market and establishment of local point of sales in farming areas. Also government has to provide input subsidy to all farmers to enable them to produce more and to pay for all marketing cost. Finally it is recommended that government provides planned workshops to all farmers, to equip them with marketing knowledge. Key words: Greater Giyani Municipality, market participation, logistic regression model, small-scale.

Efficiency of Sweet Potato Farmers in Nigeria: Potentials for Food Security and Poverty Alleviation

Nigeria is the third largest producer of sweet potatoes in the world in terms of quantity, after China and Uganda. In 2010, Nigeria produced 2.5% of the world's production of sweet potatoes. However, sweet potatoes are still considered a minor crop in the country.The study examines the economic analysis of Sweet potato production in, Kano State, North-western part of Nigeria. A sample of 120 farmers was randomly analyzed using descriptive statistics, farm budgeting technique, production function and Marginal productivity.The results revealed that majority (43.3%) of the respondents were within the age of 30 - 42 years, 70.83% were males, 69.16% were married, and majority (36.6%) attended non-formal education and 45% had farm size of between 0.2 -1.0 hectares. Results further shows that labour cost accounted for 44.1% of the total cost of production and the gross income per hectare was found to be N75,553 with a gross margin of N45, 527. The result of production function depicts the coefficient of multiple determinations (R 2 ) to be 91%. It further shows that fertilizer and manure were statistically significant at 1%, and 1% level of probability respectively. Moreover, the result of resource use efficiency reveals that farmers under utilized resources like fertilizer, manure, Seed and pesticide, except labour. Findings also revealed that, high cost of inputs; poor access to credit, poor price, pest and diseases as well as poor access to markets were among the major constraints faced by the farmers in the study area. Therefore, the study concludes that Sweet Potato production in the study area is profitable. Hence for profit improvement there is need for resource adjustment. Government on the other side should ensure timely supply of agricultural inputs at subsidized rate, provision of storage facilities and market for output in order to achieve food sufficiency and reduce poverty among farmers. The study indicated that higher yield of sweet potato could be achieved through improved sweet potato variety and application of small quantities of fertilizer as sweet potato can grow well with application small quantities of fertilizer such that is

Pricing Decisions in an Experimental Dynamic Stochastic General Equilibrium Economy

We construct experimental economies, populated with human subjects, with a structure based on a nonlinear version of the New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. We analyze the behavior of firms' pricing decisions in four different experimental economies. We consider how well the experimental data conform to a number of accepted empirical stylized facts. Pricing patterns mostly conform to these patterns. Most price changes are positive, and inflation is strongly correlated with average magnitude, but not the frequency, of price changes. Prices are affected negatively by the productivity shock and positively by the output gap. Lagged real interest rate has a negative effect on prices, unless human subjects choose the interest rate, or firms sell perfect substitutes in the output market. There is inertia in price setting, firms integrate wage increases into their prices, and there is evidence of adaptive behavior in price-setting in our laboratory economy. The hazard function for price changes, however, is upward-sloping, in contrast to most empirical studies.

Is Emission Intensity or Output U-Shaped in the Strictness of Environmental Policy?

In a model where firms face a continuous choice of how much to invest in environmental innovation, we show that an ever stricter environmental policy does not always lead to ever cleaner production methods and ever lower production of polluting goods. It does so when the abatement technology is end-of-pipe. When the abatement technology is integrated however, either emission intensity or output is U-shaped in the strictness of policy. If the emission intensity is U-shaped, it will reach its lowest value at the point where the Marginal Abatement Cost curves intersect. These results hold with emission taxation (whether firms are price-takers or they interact strategically on the output market) as well as in the social optimum.

Pricing Decisions in an Experimental Dynamic Stochastic General Equilibrium Economy

We construct experimental economies, populated with human subjects, with a structure based on a nonlinear version of the New Keynesian Dynamic Stochastic General Equilibrium (DSGE) model. We analyze the behavior of firms' pricing decisions in four different experimental economies. We consider how well the experimental data conform to a number of accepted empirical stylized facts. Pricing patterns mostly conform to these patterns. Most price changes are positive, and inflation is strongly correlated with average magnitude, but not the frequency, of price changes. Prices are affected negatively by the productivity shock and positively by the output gap. Lagged real interest rate has a negative effect on prices, unless human subjects choose the interest rate, or firms sell perfect substitutes in the output market. There is inertia in price setting, firms integrate wage increases into their prices, and there is evidence of adaptive behavior in price-setting in our laboratory economy. The hazard function for price changes, however, is upward-sloping, in contrast to most empirical studies.

Economic Sustainability through Farmers Interest Groups and their Linkage with Institutional Agencies — An Evidence from Karnataka

For improving production and marketing of agricultural produce, group approach can act as a panacea. In this endeavour, the present study carried out in the Raichur district, has reported the impact of formation of commodity-specific Farmers Interest Groups (FIGs) for pigeonpea and sweet orange crops. After formation of FIGs, several production and marketing interventions were carried like capacity building, awareness generation, knowledge enhancement, institutional linkage development, etc. The impact of FIG for pigeonpea has revealed the total additional benefit to farmers due to savings in cost and additional net returns from output share amounted, on an average over 2 years of 2010–11 and 2011–12, to 23,991 per farmer or 5,756 per acre. The impact of FIG for sweet orange has shown additional benefit of 7899 per ton (78.50%) over the private dealers of Bangalore market and 8456 per tonne (89.50%) over pre-harvest contractors by selling through Safal institutional market. Therefore, promotion of FIGs and their linking to institutional agencies for input supply, output marketing and technology transfer would result in improvement in livelihood of farmers, leading to economic sustainability. Therefore, the study has suggested to bring out a comprehensive policy with institutional framework and adequate incentives for promotion of FIGs for agricultural and horticultural crops in the country.

Romania in the Context of European Innovation and Marketing of Intellectual Output

The most recent snapshot of European Union's innovation landscape, i.e. the Innovation Union Scoreboard 2013 report, sets out a series of innovation indicators which, when related to Romania's relevant results, are somewhat surprising. We specifically refer to the license and patent revenues from abroad indicator, where the growth recorded by Romania was the highest at EU level (i.e. 23.4%, whereas the Union's average was 6.1%). With regards to the 2013 data, one can observe a certain discrepancy between the excellent results in terms of innovation commercialization and Romania'sconstant position of modest innovator, with aggregated results well below the EU average. In this context, we analyze the aforementioned results, relative to the innovation landscape at national level, researching the operational and statistic premises thereof, as well as those related to specific policies in place, in an attempt to identify the explanation of such performances, while also testing their sustainability in the wider context of the innovation sector.

Livelihood Diversification Pattern among the Farmers of West Bengal

Based on research from Darjeeling and Uttar Dinajpur districts of West Bengal this paper presents evidence that non-farm and off-farm activities are carried out by a significant proportion of farmers and make an important contribution to livelihoods. The average diversification index in the study area was 0.46. Majority of the diversifiers had medium extent of diversification. It shows that there is a high involvement of farm women (24%) in diversification activities. Diversification activities make a greater contribution to cash incomes for poorer households. The study found that farmers from Darjeeling district are more diversified (52%) compared to Uttar Dinajpur district (39%). The reason might be that the scope and marketing in non-farm sector are higher in Darjeeling as compared to Uttar Dinajpur district. In Darjeeling district unavailability of land as well as unproductive land particularly in the hill and comparatively high cost of living also forced farmers to diversify into other sectors for their livelihood. Despite the vast potentiality to diversify the livelihood towards farm and non-farm activities in the study area, there were problems such as negative perception of the community, outdated method of production, lack of improved technology and skills, lack of business start- up budget and absence of market for the non-farm output. There are also lacks of potential researches to study the effect of non-farm activities on farm production and to identify the major problems that hamper the non-farm sector. State machinery should play a facilitator's role in terms of promoting investment in infrastructure such as road, electricity, irrigation facility etc. more of a decentralized operations for government programmes, especially using the local institution for greater efficiency and better outreach.

ECO MARKETING IN AGRICULTURE AND BARRIERS TO ORGANIC FOOD SALES

Eco-agriculture is based on the biological approach, in which nature is a unified whole. Its aim is sustainable and ecologically balanced agricultural system producing quality food, protecting and using natural resources and landscapes in a sustainable manner. Market output of eco-agriculture is organic food. Its successful application in the market is distorted by the action of the barriers to their consumption and barriers to quality, price, situational, habit, motivation, information and trust barriers. To overcome these barriers contributes active using of eco marketing tools.

Market distortions and local indeterminacy: A general approach

We provide a methodology to study the role of market distortions on the emergence of indeterminacy and bifurcations. It consists in introducing general specifications for the elasticities of the crucial functions defining the aggregate equilibrium dynamics of the model. This allows us to study how market distortions influence the range of values for the elasticity of input substitution under which local indeterminacy and bifurcations occur, highlighting the main channels and classes of distortions responsible for indeterminacy. Most of the specific market imperfections considered in the related literature are particular cases of our framework. Comparing them we obtain several equivalence results in terms of local dynamic properties. Applying this methodology to the Woodford [30] framework we find that distortions in the capital market, per se, do not play a major role. We further show that, for empirically plausible values of elasticity of substitution between inputs, indeterminacy requires a minimal degree of distortions. This degree seems to be high under output market distortions, while with labor market distortions the required degree is empirically plausible.

Factors influencing Irish farmers' afforestation intention

The natural conditions in Ireland have a positive influence on tree growth as the mean annual increment is twice as high as that in mainland Europe. However, due to centuries of resource exploitation and the expansion of agricultural land the island has the second lowest forest cover in the EU. An increased forest cover would encourage the establishment of a range of processing industries and thus support necessary economic development in rural areas. Furthermore through farm afforestation farmers are given the opportunity to diversify their businesses, as market output of the majority of cattle and sheep farms in Ireland often does not cover the production cost. To increase forest cover, the Government in 1989 introduced a scheme supporting farm afforestation, which is encouraged through premium payments that are high enough to make forestry more profitable than the majority of drystock farming. Afforestation targets, however, have not been met and previous studies have failed to offer a consistent explanation for the shortfall in planting rates. Thus, the objective of this work was to identify the factors influencing farmers' afforestation decision. More specifically the study aimed at identifying the combined effect of structural, socio-demographic and attitudinal factors on the probability to plant. Based on previous findings from in-depth interviews with Irish farmers' about their goals and values regarding farming and afforestation, a postal survey was conducted in Spring 2012 including question on farm structure and socio-demographic variables as well as questions on reasons for planting/not planting. The data was analysed using logistic regression. The developed logit model showed that while profit goals did not significantly influence the decision-making with regard to farm afforestation, structural as well as attitudinal factors played a vital role in this process. This was identified as one reason as to why the current incentive scheme failed to deliver the outlined afforestation targets. Other policy tools are needed in addition to the incentives to further encourage afforestation.

Potential anti-competitive effects of emission permit markets – A survey on theoretical findings and evidence

Abstract Emissions trading has been established as an important instrument of pollution control in many world regions. However concerns have been raised whether or not emission-trading schemes may distort competition either on the permit market itself or on related output markets. In this paper we review tradable emission-allowance schemes with special reference to anti-competitive effects. Such distortions may be caused by large firms exercising market power on the allowance market by holding down supply or suppressing demand in order to manipulate prices to their advantage. Firms may also try to abuse the allowance market to put other firms, with whom they compete on the output market, at a competitive disadvantage. Further distortions and abuses may be caused by special or ill-defined rules on the allowance market or other markets. In this paper we survey theoretical insights on potential anti-comptitive effects of emissions trading and also provide some empirical evidence for market power abuses on auctioned and grandfathered allowance markets with a particular focus on the (alleged) allowance market abuse by power utilities in Germany and California.

Assessment and comparison of conventional and modern irrigation systems to manage irrigation water supplies in the River Nile State of Sudan

The increased use of irrigation water in the River Nile State (RNS) puts a great pressure on the local hydrology and ecosystem. The RNS is regarded as one of the important areas where large investments in irrigation take place for food and cash crops production. The adoption of various techniques of water conservation is becoming necessitated including the large meaning of water use efficiency. The sustainability of irrigated agriculture is questioned and the challenge is to increase simultaneously land and water productivity in the face of the limited availability of land and water in the RNS. The aim of this research is to assess the irrigation water management performance of two irrigation schemes based on the option that irrigation is mandatory in both from the River Nile by pumps and to identify options to improve irrigation water performance. The analysis was based on structured survey questionnaires, field observations, and literature from Elzeidab scheme where surface irrigation is prevalent which is known as a traditional system; and from Bashaier scheme where sprinkler irrigation exists as a modern system. Integrated techniques involving economic and hydrologic components are used to assess irrigation water use in both schemes under study. Descriptive statistics and quantile analysis for crop water applied and crop water requirements for Elzeidab and Bashier field crops are presented. Crop Wat4 and SPSS have been employed to evaluate the irrigation water performance of tow scheme administrations. The results suggest that vast irrigation water devoted for agricultural production in the state coupled with low production will need attention on water management, allocation, quantities, and introduction of water-saving technologies. Water management in the Elzeidab scheme is not well qualified to handle irrigation water. Lack of staff awareness in Elzeidab led to inefficient water use. The paper concluded that in order to improve the water management performance of the Elzeidab pump irrigation scheme, numerous challenges are needed to contribute to saving irrigation water in the future: institutional support (input supply, output marketing, and credit services), training of staff on improved crop and water management issues, regular supervision, and monitoring of scheme activities are crucial.

Does output market development affect irrigation water institutions? Insights from a case study in northern China

The main aim of this paper is to examine the impact of changing external conditions on irrigation water institutions in northern China. To this end, we perform a case study analysis of the impact of output market development on irrigation water transactions, using survey data collected among 315 households in Minle County, Zhangye City, Gansu Province, covering the year 2009. Households in this region possess tradable water use rights. Moreover, a major agro-processing company has recently been established and the local government intervenes in the allocation of water to stimulate farmers to grow a cash crop for that company. Despite these favourable enabling and driving factors, we find that market water trade is virtually absent. Instead, we observe that reciprocal water use arrangements (water swaps) have emerged at a limited scale. We argue that factors other than an improvement in the output market (such as producer ignorance, centrally set prices, trust) need to be considered, if improvement in the market for irrigation water is to occur.

Assessment of socioeconomic aspects in irrigation water use inefficiency in Sudan

The River Nile State (RNS) of Northern Sudan can rightly be considered as a river-born nation with a high population density in the settled areas along the River Nile and Atbara River. The competition for irrigation water and land increases resource management complexity. The paper undertook the Elzeidab irrigated scheme of RNS as study area. The aim of this research is to assess the social and economical performance of the scheme’s tenants and to identify options to improve irrigation systems and water resource management. To realize these objectives structured survey questionnaires, field observations, and literature were used. A total of 70 randomly selected respondents from the Elzeidab scheme were interviewed. Integrated techniques involving economic and hydrologic components are used to assess water use efficiency in the RNS. Descriptive statistics and quantile analysis for crop water was applied and crop water requirements for Elzeidab field crops are presented. GAMS, Crop Wat4, and Cobb–Douglas function have been employed to evaluate the social and economical performance of the Elzeidab scheme tenants. The results suggest that vast irrigation water for agricultural production in the State coupled with low production will need attention on water management, allocation, quantities, and introduction of irrigation water saving technologies. Lack of tenants’ awareness led to inefficient water use. The paper concluded that in order to improve the economic and environmental performance of public pump irrigation schemes of the State, numerous challenges are needed to contribute to saving irrigation water in the future: institutional support (input supply, output marketing, and credit services), training of tenants on improved crop and water management issues, regular supervision, and monitoring of scheme activities are crucial.

Factors Influencing Diversification and Intensification of Horticultural Production by Smallholder Tea Farmers in Gatanga District, Kenya

The contribution of traditional cash crops in the Kenyan economy is slowly being surpassed by horticulture saves for tea which continues to lead in terms of contribution to GDP and foreign exchange earnings. Smallholder tea farmers, who produce 62% of tea in Kenya, have however, also shown an increasing interest in production of horticultural crops for income and livelihoods. This shift is only possible if the tea income is insufficient to meet their needs or if there is a strong incentive to engage in horticultural production. It’s however not well documented on what actually influence the smallholder tea farmers’ resolution to diversify into horticulture. This study aimed at identifying these drivers as well as the determinants of intensity of diversification into horticulture. Using a Heckman two-step model to analyze a sample of 161 smallholder farmers collected using a multistage sampling technique, group membership, value of agricultural assets, amount of hired labour, occupation of the household head, contractual arrangements, farm size and distance to the output market were the major determinants of the farmers decision to diversify into horticulture. The intensity of diversification was influenced by gender of the household head, number of children pursuing post primary education, area under tea, occupation of household head, size of the farm, soil conservation activities and experience of the farmer in cash crop farming. The study specifically identified a need for a comprehensive land policy to address the plight of smallholder tea farmers in the study area.

Production planning for static Cournot duopoly competition under random yield

The duopoly model with a Cournot form under random yield has received little attention. This article revisits the classic Cournot duopoly competition model by considering manufacturer yield uncertainty. We analyze the model under symmetric, asymmetric and monopoly situations. The manufacturers’ best production policy and expected market share are compared with each other in each situation. The expected market outputs of the three models are also compared under certain conditions. In the asymmetric case, the asymmetric model is extended by considering a powerful oligarch who can exert influence on her rival’s production decision by releasing her cost-type information. We derive that the maximization of the stronger manufacturer’s expected profit is highly correlated with consumer surplus. Numerical examples are presented to illustrate the results.