Abstract: The widespread use of personal computers and spreadsheet models for feasibility studies makes risk-based Monte Carlo simulation analysis of proposed investments a relatively simple task. Add-in simulation packages for Microsoft® Excel can be used to make spreadsheet models stochastic. Rather than basing investment decisions on point estimates, investors can easily estimate the implied distributions of returns for uncertain investments and calculate the risk of an investment as well as the probability of success. The benefits of using Monte Carlo simulation to analyze a risky investment are demonstrated using an ethanol plant as an example.
Key Words: economic feasibility analysis, ethanol feasibility, risk management, stochastic simulation
Contact Author:
James W. Richardson
Dept. of Agricultural Economics
Room 450 Blocker Building
2124 TAMUS
Texas A&M University
College Station, TX 77843-2124
Phone: (979) 845-5913
Fax: (979) 845-3140
Abstract: This research tests for changes in aggregate milk production due to the operation of the Milk Income Loss Contract (MILC) program since 2002. Aggregate production is decomposed into the size of the dairy herd and milk production per cow. We find no statistically significant response in either variable. This finding implies that the simultaneous operation of income and price support programs in the United States has not, thus far, proven self-defeating.
Key Words: dairy, income support, policy, price support
Contact Author:
Henry Bryant
Agricultural and Food Policy Center
Department of Agricultural Economics
2124 TAMUS
Texas A&M University
College Station, TX 77843-2124
Phone: (979) 845-5913
Fax: (979) 845-3140
Abstract: This study examined the impacts of four promotional tactics-features, displays, features and display together, and temporary price reductions-in context of a conditional demand system for 12 beverages. The Rotterdam model with promotion effects specified through the Tintner-Ichimura-Basmann relationship was used in the empirical study. The estimated conditional-demand equations exhibited relatively strong own- and cross-promotional effects, indicating a relatively high level of competition for market share among the beverages studied.
Key Words: advertising, demand, promotion, Rotterdam model
Contact Author:
Mark G. Brown
Economic and Market Research Department
Florida Department of Citrus
University of Florida
2129 McCarty Hall
P.O. Box 110249
Gainesville, FL 32611-0249
Phone: (352) 392-1874
Fax: (352) 392-8634
Abstract: A survey was used to gauge consumer preferences toward four fresh pork attributes: juiciness, tenderness, marbling, and leanness. The survey elicited consumers' willingness-to-pay a premium for an improvement in these attributes. Approximately one-half of the respondents were willing to pay some premium for the attributes of juiciness, leanness, and tenderness. The average premium size ranged from $0.20/lb. for marbling to $0.37/lb. for tenderness. Neither the choice of a certifying agency nor the use of a cheap talk script influenced premium levels.
Key Words: pork attributes, pork markets, willingness to pay
Contact Author:
Dwight R. Sanders
Dept. of Agribusiness Economics
Southern Illinois University
Mail Code 4410
Carbondale, IL 62901
Phone: (618) 453-1711
Fax: (618) 453-1708
Abstract: Thoroughbred broodmares are the foundation of a successful racing operation. This study estimated the impact of breeding, racing, and market characteristics on broodmare auction prices. Data represent 604 in-foal broodmares sold in Keeneland's 2005 sale. Prices were highly responsive to the sire's stud fee, the broodmare's age, and progeny performance in graded stakes races, with pronounced day-of-sale effects. The stud fee marginal value was substantially lower than one break-even estimate, suggesting possible disincentives for investment in stallion services. Out-of-sample forecasts were far superior to naïve forecasts but were not accurate enough to use in isolation from other decision aids.
Key Words: broodmare, forecasting, hedonic price analysis, Thoroughbred
Contact Author:
Leigh J. Maynard
Dept. of Ag. Economics
319 C.E. Barnhart Bldg.
University of Kentucky
Lexington, KY 40546-0276
Phone: (859) 257-7286
Fax: (859) 257-7290
Abstract: Labels have been used to make food attributes transparent and to satisfy the increasing consumer demand for information about food credence values. Several types of prevalent U.S. food labels, their contributions, and the regulatory agencies behind them are examined in this paper. Additionally, studies dealing with the willingness-to-pay (WTP) for labeled products and the use of food labels as non-tariff trade barriers are discussed. While unilateral labeling requirements are identified as a major form of non-tariff trade barriers, positive media influence and trust in the government and science are important factors that affect consumer WTP for food credence characteristics.
Key Words: consumer willingness-to-pay, food credence characteristics, food labeling, non-tariff trade barrier simulation
Contact Author:
Shida Rastegari Henneberry
Department of Agricultural Economics
Oklahoma State University
308 Ag. Hall
Stillwater, OK 74078
Phone: (405) 744-6178
Fax: (405) 744-8210