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Metropolitan agriculture is not homogeneous. This paper delves beneath metropolitan county averages using data on individual farms in the Northeast classified into three statistically distinct types. A small group of adaptive farms profit from intensive production on smaller acreage to accommodate themselves to the urban environment. Traditional farms have increased costs and pressures on their more extensive operations without compensating increases in revenue from better-adapted enterprises. A large group of recreational farms subsidize small-farm activities from nonfarm income. Operating characteristics of each farm type are presented and their importance to metropolitan agriculture is assessed. Implications for preserving farming and farmland in the Northeast are drawn.
Before the 1970s, the U.S. economy was so large relative to the rest of the world that few American economists worried about the international sector and its relation to the U.S. economy. That view has changed dramatically in the past two decades. Total U.S. trade has increased from only $83 billion in 1970 to $866 billion in 1990, averaging a 12.4% increase each year. Exports accounted for less than 4% of U.S. gross national product (GNP) in the 1950s and 1960s, but now exports account for about 6% of U.S. GNP. These changes have radical implications for U.S. firms and government policies. The U.S. can no longer disregard economic occurrences in the rest of the world.
The nonparametric approach to consumer-demand analysis—based on revealed-preference axioms—is reviewed. Particular attention is paid to questions of size and power of tests for consistency of data with the existence of a stable, well-behaved utility function that could have generated the data. An application to Australian meat demand is used to show how these notions can be quantified and how prior information about elasticities, following Sakong and Hayes, may be used to increase the power of the approach.
One potentially serious problem in evaluating the effectiveness of extension programs is that participants are not picked at random. Self-selection can be a problem, and it can be compounded if extension officials concentrate on the most progressive farms. This study explores the relationships between adoption of maize high-yielding varieties (HYVs) and participation in field trials intended to foster HYV usage, drawing on data from Swaziland. Results indicate that it is impossible to say if field trials had any effect on adoption. Participating farms used more HYVs, but this could have been due to self-selection or the government's selection process.
Pesticide regulation has become a topic of increasing interest in recent years, owing to rising public concerns about residues on foods, in drinking-water wells, and damage to wildlife. Public-opinion polls and political responses to incidents like the controversy over Alar suggest that demand for government intervention to protect public health and the environment from pesticides is high. Pesticides are toxic by design; survey evidence indicates that they are perceived as riskier than other, more common pollutants like auto exhaust (see, for example, Horowitz). Pesticide residues are not easily observable (short of laboratory analysis), making averting strategies by individuals extremely difficult and/or excessively costly to implement.
The Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and its amendments and related legislation currently require that applicants for registration or reregistration of a pesticide demonstrate to the U.S. Environmental Protection Agency (EPA) that there is not “any unreasonable risk to man or the environment, taking into account the economic, social, and environmental costs and benefits of use of the pesticide.” Present benefit evaluation guidelines call for consideration of effects on users, nonusers, consumers, GNP, and employment. Minimum guidelines call for a partial budgeting analysis and, if output effects of eliminating the pesticide appear large, a more sophisticated analysis using neoclassical multimarket economic-surplus concepts.
This study's objective is to identify and understand the factors important to hardwood processors’ location decisions in the northern and central Appalachian region. Concepts from neoclassical and behavioral location theories were integrated to develop a general framework for analyzing these decisions. Logit regression analysis was used to determine those establishment characteristics related to the likelihood of location search. To a great extent, establishments locate based on personal ties and do not conduct searches. Most variables found to influence the likelihood of search are not controllable by state or local governments. The implications are that existing establishments should be targeted for retention and expansion, rather than focusing on recruitment.
Short- and long-run Hicksian and Marshallian elasticities are estimated, along with Morishima elasticities of substitution, using a restricted profit function and a series of decomposition equations. Convexity in prices and concavity in quasi-fixed factors of the restricted profit function are simultaneously imposed using Bayesian techniques. The empirical model is disaggregated in the input side, utilizes a Fuss-quadratic flexible functional form, incorporates the impact of agricultural policies, and introduces a new weather index. The methodology is applied to Illinois's agriculture, and implications for agriculture in the Corn Belt and the Northeast are briefly discussed.
Seasonal swings in milk production in Florida result in a need to import milk on a seasonal basis. A linear programming analysis is used to analyze alternate freshening-date distributions and project the cost savings to Florida dairy farmers from reduced milk imports.
Nonparametric techniques have recently come into vogue in agricultural economics: Applications abound in both consumer and producer models of the agricultural economy. Moreover, several distinct approaches to nonparametric analysis exist. There are nonparametric statistical techniques, semiparametric estimation techniques, nonparametric revealed-preference analysis of consumption data, and nonparametric analysis of production data. Both revealed-preference analysis and nonparametric analysis of production data rely on the basic fact, which provides the foundation for much of modern duality theory, that convex sets can be completely characterized by their supporting hyperplanes. This observation allows one to apply simple mathematical programming (in particular, linear programming) methods to analyze production and consumption data. My task today is to provide an overview of nonparametric programming approaches to production data. Thus, I will not address any of the other topics cited above. However, I would be remiss if I did not mention the close connection between these subject areas and what I intend to survey today. Moreover, one should also recognize that very closely related to the literature on nonparametric programming analysis of production data are the fields of estimation of efficiency frontier via statistical methods. (A useful survey here is Lovell and Schmidt).
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Two issues lurk in the background of the papers by Lichtenberg, Taylor, and Cropper et al. The first is a specific question about the goal of regulatory policy. The second is a more global consideration regarding politics, technological change, and the future.
Firm-varying production technologies were estimated using random coefficients regression methods for a sample of Massachusetts dairy farms. Results were compared to OLS Cobb-Douglas production function estimates. The random coefficients regression model was found to virtually eliminate conventionally measured firm technical inefficiencies by estimating individual firm technologies and ascribing remaining inefficiencies to specific inputs. Input-specific measures of firm inefficiencies showed hired labor, land, and machinery inputs to be used in excess of efficient levels. Livestock supplies were underutilized by all farms. Efficiencies of feed, crop materials, fuels, and utilities varied, although estimated means were closer to optimal levels.
This paper empirically tested the three conditions identified by McConnell for equivalence of the linear utility difference model and the valuation function approach to dichotomous choice contingent valuation. Using a contingent valuation survey for deer hunting in California, two of the three conditions were violated. Even though the models are not simple linear transforms of each other for this survey, estimates of mean willingness to pay and their associated 95% confidence intervals around the mean were quite similar for the valuation methods.
To examine productivity growth in New Jersey's food-processing sector, this study conducts a joint analysis of total and partial factor productivity indexes. Results indicate growing material intensity, declining labor and capital intensities, and relatively slow material productivity growth. However, due to the high cost share of material inputs, material productivity growth contributed more to total factor productivity growth than did growth in the productivity of any other input. In fact, almost half of the growth in overall productivity is attributed to material productivity growth. Results also suggest that the 1973 decline in total factor productivity was characterized by greater decline in material productivity than in the productivities of labor and capital.
Protest bids are often excluded during analysis of contingent valuation method data. It is suggested that this procedure might introduce significant bias. Protest bids are often registered by respondents who may actually place a higher- or lower -than-average value on the commodity in question but refuse to pay on the basis of ethical or other reasons. Exclusion of protest bids may therefore bias willingness to pay (WTP) results, but the direction of bias is indeterminate a priori.
In previous work (Cropper et al.), we examined the U.S. Environmental Protection Agency's (EPA's) decision to cancel or continue the registration of pesticides that went through its Special Review process between 1975 and 1989. Our focus in that paper was on the final decision (Notice of Final Determination) issued by the EPA at the end of the rule-making process. Specifically, we asked whether this decision could be explained by the reported risks and benefits associated with pesticide use, and by the comments of special-interest groups that were entered in the public docket.
This paper explores the issue of the power of nonparametric tests to check for the consistency of data with utility maximization. Alston and Chalfant provide an excellent review of nonparametric approaches to consumer-demand analysis. They test for consistency, separability, and power. The authors address two important questions: First, how does one define power for nonparametric situations, and is that definition comparable to the parametric situation? Second, can the power of nonparametric tests be improved? The authors measure the statistical power of nonparametric methods using a parametric test, though they do not address whether it is legitimate to use parametric tests on nonparametric methods.
