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Staff Papers (Resource Economics & Environmental Sociology)

The purpose of the Resource Economics and Environmental Sociology "Staff Paper" series is to provide a forum to accelerate the presentation of issues, concepts, ideas and research results within the academic and professional community. Staff Papers are published without peer review.
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  1. Choice Environment, Market Complexity and Consumer Behavior: A Theoretical and Empirical Approach for Incorporating Decision Complexity into Models of Consumer Choice [Download]

    Title: Choice Environment, Market Complexity and Consumer Behavior: A Theoretical and Empirical Approach for Incorporating Decision Complexity into Models of Consumer Choice
    Creator: Swait, Joffre
    Description: Most empirical models of consumer choice assume that the decision-maker assesses all alternatives and information in a perfect information processing sense. The complexity of the choice environment, the ability of the individual to make complex decisions and the effect of choice context on the decision strategy, are generally not considered in statistical model development. One of the reasons for this omission is that theoretical literature on choice complexity and imperfect ability to choose has not been translated into empirical methods that permit such considerations in econometric analysis. In this paper we outline a theoretical model that considers task complexity, effort applied by the consumer, ability to choose, and choice. We then construct a measure of task complexity and incorporate this in a random utility model. We employ this model in the analysis of a number of data series. Our findings suggest that task complexity does affect inferences about choice model parameters and that context effects, like complexity, have a systematic effect on the parameters of econometric models of choice. Not accounting for complexity or context effects will result in significant bias in the estimated preference parameters.
    Subjects: choice context, choice modeling, random utility
    Date Created: 1999
  2. Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation [Download]

    Title: Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation
    Creator: Adamowicz, Wiktor
    Description: The measurement of passive use values has become an important element of environmental economics over the past decade. Damage assessment cases in the U.S. and Canada have prompted considerable research activity in this area, yet the topic is quite controversial and debate over the theory and measurement of passive use values has permeated the economics profession (eg. Hanneman, 1994; Diamond and Hausman, 1994). Much of the controversy surrounds the use of the contingent valuation method (CV) in eliciting passive use values and the various \"issues\" that arise when the technique is employed. There is a substantial literature on the CV method (eg. Mitchell and Carson, 1989; Natural Resource Damage Assessment, 1994) and its advantages and disadvantages. We do not review this literature here, rather we explore the use of another stated preference approach for measuring passive use values, the choice experiment, and compare it to CV. Choice experiments have been employed in the marketing, transportation and psychology literature for some time (Batsell and Louviere, 1991; Louviere, 1988a; 1988b, 1991; Hensher, 1994). They arose from conjoint analysis which is commonly used in marketing and has been applied to natural resource damage assessment. Choice experiments (at times called stated preference methods), however, differ from typical conjoint methods in that individuals are asked to choose from alternative bundles of attributes instead of ranking or rating them. Thus choice experiments are consistent with random utility theory and are an alternative to CV as a method of eliciting passive use values. Researchers have achieved positive results using choice experiments to value the effect of environmental improvements on use values (Adamowicz et al, 1994). In this paper we outline the use of choice experiments (CE) for measuring passive use values and present several potential advantages of this approach. We then develop a particular empirical application, the measurement of value associated with enhancing the population of a threatened species, using both CV and CE methods of valuation. We also combine the information from both techniques in order to test for differences in preferences and error variances arising from the two methods. Our results show that choice experiments have considerable merit in measuring passive use values for the following reasons: (1) the method provided a richer description of the attribute tradeoffs that individuals are willing to make, (2) the CV model error variance was not significantly different than the error variance in the choice experiment model, (3) when combined with CV data we found that the marginal utility of income parameters were not significantly different (when variance heterogeneity is taken into account), and (4) the welfare values from the CE generally have smaller variances (relative to their means) than the CV estimates. These results lead us to suggest that choice experiments may outperform CV methods in applied analysis.
    Subjects: choice experiment, passive use values, contingent valuation
    Date Created: 1995
  3. Export Markets for Canadian Grain: Trends and Market Mix [Download]

    Title: Export Markets for Canadian Grain: Trends and Market Mix
    Creator: Veeman, Michele M.
    Description: This paper overviews the results of three separate, but related economic research projects conducted from 1985 to 1991 and funded by Farming for the Future. The topic of the first two of these concerned export markets for wheat. One might question how such topics relate to the theme of Agri-food Diversification, which is the focus of this Farming for the Future research conference. The three projects do relate to this theme. They focused on the analysis of diverse and distinct market segments for different types or classes of grains and the relative values of different characteristics of grain. Our emphasis on wheat and barley markets also reflects the fact that while other special crops provide very useful production and market alternatives for Alberta farmers, the relatively limited market size for many special crops necessitates continued research on the agronomic and economic characteristics of wheat, barley, and oilseeds. Some basic information on the recent geographic destination of Canada's total grain exports (including oilseeds) and on Canada's share of world grain markets in the last decade is given in Tables 1 and 2. A major concern of the first project was to analyse trends, market shares and values of different types or classes of wheat based on characteristics such as protein pattern of import behaviour by wheat importing nations. For this purpose importers were classified into five broad categories, based on similar socio-economic characteristics of their markets. These categories were the developed or high income market; the centrally planned markets of eastern Europe and the former USSR; the centrally planned Asian market (a market dominated by China); the very substantial but fragmented middle-income developing nation group; and the low-income developing nations, a group that includes the poorest countries in the world. In the second study, we analysed \"importer loyalty\" for different classes of wheat and for wheat from different suppliers. This involved estimating the probability of repeat purchases by the different broad categories of buyers for wheat from different sources and for broad classes of wheat. The final study focused on barley export markets. This study included an analysis of time-series data on barley imported into four selected markets. These analyses complemented a cross-sectional analysis of feedgrain and total grain imports. Overall a number of quantitative methods and economic models were applied in these analyses. Exporter and importer profiles for wheats and barley were based on market share and trend data. Market share models included deterministic constant market share models which enabled us to decompose changes in market shares into world trade, country, commodity, and competitive effects. Econometrics analyses enabled us to make estimates of the value of major characteristics of wheat. These techniques also provided the estimation procedure for analysis of an aggregate cross-sectional analysis of foodgrain demand, and were the means of estimating import demand functions for four major barley markets. Programming analyses were employed in the importer loyalty analysis. Some of the more important results of these varied analyses are outlined below.
    Subjects: international trade, grain markets
    Date Created: 1992
  4. A Socio-Cognitive Basis for Strategic Groups: Cognitive Dissonance in Swine Genetics [Download]

    Title: A Socio-Cognitive Basis for Strategic Groups: Cognitive Dissonance in Swine Genetics
    Creator: Ng, Desmond
    Description: According to socio-cognitive models in organizational theory literature, managers share similar mental models or cognitive maps of the competitiveness of firms in an industry. Managers are increasingly challenged to understand rapidly changing market settings, where their competitive position is continually evolving as competitor initiatives and business dynamics interact complexly. In well managed firms, considerable resources are expended routinely to monitor competitor actions and customer requirements. Over time, this and other information is summarized within the perception of managers as cognitive maps of the rivalry network in which firm operates. More precisely, as Reger and Huff (1993) comment, that \"while cognitive simplification and cognitive elaboration could lead to totally idiosyncratic groupings, strategists who work in the same industry environment are expected to develop shared perceptions of the competitive environment over time.\" Cognitive maps are the result of individuals \"organizing, simplifying, and interpret[ing] the mass of stimuli that constantly confront them.\" According to personal construct theory, cognitive maps or constructs are defined \"in terms of similarities and differences and are organized into systems of meanings which individuals use to develop theories about the environment, to make predictions and guide action.\" Although the cognitive map concept has been explored from the manager's perspective, such marketplace perceptions undoubtedly are not limited to the managers in charge of product sales in the market. It seems logical to expect that customers have perceptions of marketplace rivalry. In addition, intermediaries often exist who provide services associated with the product in question, whose activities naturally lead to the development of competitiveness perceptions. However to date, socio-cognitive models in organizational theory have explored little about the differences in cognitive maps outside these management groups. Given a cognitive approach to the existence of strategic groups, the purpose of this study is the examination of the existence of differences between market participants or \"cognitive dissonance\" at a group level of analysis. More precisely, it involves the study of differences in cognitive maps of market performance (firms (swine genetic companies), intermediaries (veterinarians) and end consumers (farmer)) in the swine genetic firm value chain whereby the cognitive maps of each of these market participant groups refer to the beliefs or cognition of the competitiveness of swine genetic firms in the industry (i.e. firms' competitiveness). Since this study employs a cognitive approach, the notion of \"strategic groups\" is defined as a market participant group's perception of the competitiveness of firms in which firms that are perceived to be similar in certain competitive attributes (i.e. firm size, financial strength, price, consumer relations, and quality of products produced, such as sow productivity, health status of stock, consistency of product) are clustered together, while those that are not grouped with other more similar firms. As a result, the classification of individual perceptions of firms based on similarities and differences comprise one's perceived orientation of \"strategic groups.\" \"Strategic groups\" are in essence cognitive maps.
    Subjects: consumer behavior, swine genetics, cognitive dissonance
    Date Created: 2002
  5. Farmer Group Development in Kenya: Issues and Recommendations for Service Providers [Download]

    Title: Farmer Group Development in Kenya: Issues and Recommendations for Service Providers
    Creator: Parkins, John R.
    Description: For decades now, there have been grave warnings about the alarming rates of tree and shrub destruction in the tropics. These warnings stressed the disastrous consequences of deforestation and predicted imminent fuelwood deficits across the African continent. However, the reality has been somewhat different from the worst-case scenario promoted by these doom-sayers. In fact, scientists looking at issues of land degradation, deforestation and population dynamics in Africa are now realizing that these alarmist statements were remiss by not taking into account the value and effort that farmers on the continent have put into long-term land care and regeneration. A study published in 1994 reveals that, contrary to popular belief, Kenyan land covered by trees and shrubs increased 4.2% annually from 1986 to 1992 (Holmgren, Masakha, &Sjoholm, 1994). The present study supports these national-level findings at the local level in Mbeere District, Kenya. Amid dramatic changes in land use, this study found that farmer-initiated, small-scale tree nurseries are at the heart of local efforts in reforestation, right on the farms themselves. To the extent that these nurseries represent farmers' efforts to integrate trees on their farmland, they are fundamentally important to the long-term development of farm forestry in the region.
    Subjects: land use, farm forestry, deforestation
    Date Created: 1997
  6. A Survey of Literature on Genetically Modified Crops: Economics, Ethics and Society [Download]

    Title: A Survey of Literature on Genetically Modified Crops: Economics, Ethics and Society
    Creator: White, R. McKay
    Description: This paper reports on a review of literature in the form of academic papers and published research on ethical and consumer issues for GM crops in North America, with particular emphasis on GM wheat. The issues raised in these papers and the findings and arguments posed by the authors are outlined. A general conclusion that can be drawn from this overview is that public attitudes toward GM foods are diverse and sometimes quite strongly held. The strong negative views of GM food held by some appear to be mainly grounded in individuals' ethical or moral values. Ethical and risk assessment issues have not been fully explored in the existing literature. There is a general consensus in the applied economics literature that GM crops result in economic benefits, although benefits to individual consumers may not be great enough to overcome perceived risk. Carefully planned provision of credible information informing members of the public and benefits and related issues of concern or costs associated with agricultural biotechnology may have benefits for farm and industry groups, but maintenance of trust in information sources and content is vital to credibility. The discovery and use of genomic techniques that express explicit consumer benefits may lead to more favourable attitudes by many consumers.
    Subjects: GM crops, wheat
    Date Created: 2007
  7. Statistical Overview of Field Crop Acres, Yields, and Prices in Western Canada [Download]

    Title: Statistical Overview of Field Crop Acres, Yields, and Prices in Western Canada
    Creator: Yang, Danyi
    Description: This study is a statistical overview of acres, yields, and prices for major field crops in western Canada. The period of study is from 1908 to 2006. The field crops considered in this study are wheat, rye, barley, oats, canola, flax, and summer fallow. The provinces covered in this study are Manitoba, Saskatchewan, Alberta, and British Columbia. The objective of the report is to provide background analysis for future research on the economics of increased tolerance in cereal crops in Western Canada. Acres, yields, and prices are examined for each crop in each province. Inflation is taken into account so all nominal prices are converted to real prices with a base year 2005. Wheat yields for Manitoba, Saskatchewan, and Alberta are compared with each other based on regression analysis to determine if the historical trend in yields differs between the three provinces. Unless otherwise noted, \"wheat\" refers to all wheat including spring, winter, and durum wheat. However, winter wheat is a crop of interest in the cold tolerance study. As a result, winter wheat acreage and yields are examined and compared with spring wheat in a separate part of this report.
    Subjects: crops, prices
    Date Created: 2007
  8. Short-run Dynamics of the Canadian Wood Pulp Industry: A Vector Autoregression Analysis [Download]

    Title: Short-run Dynamics of the Canadian Wood Pulp Industry: A Vector Autoregression Analysis
    Creator: Alavalapati, Janaki R.R.
    Description: The short-run dynamic impacts of macroeconomic variables on the Canadian pulp industry and the interactions among pulp sector variables are investigated using the vector autoregression (VAR) approach. In contrast to the findings of earlier studies, our results show that an increase in the value of the Canadian dollar will result in an increase in pulp production. We also find that Canadian pulp exporters decrease their prices in response to a rise in the value of the Canadian dollar, suggesting that maintaining market share is important to Canadian pulp producers. Impulse response functions suggest that pulp price is more volatile than production in response to shocks in macroeconomic and pulp sector variables. This result is thought to be due to the inventory levels being maintained to follow a \"production smoothing\" strategy. We also find that pulp exports and domestic use of pulp are not very responsive to an increase in Canadian pulp price. This suggests that paper manufacturers' demand for pulp may be inelastic because of their capacity constraints.
    Subjects: vector autoregression, pulp industry
    Date Created: 1994
  9. A Predator-Prey Model for Shares of Wealth Between Industry and Agriculture [Download]

    Title: A Predator-Prey Model for Shares of Wealth Between Industry and Agriculture
    Creator: Apedaile, L. Peter
    Description: The problem is to explore the possible coordinates and stability conditions for equilibria between agricultural wealth and industrial wealth generation and distribution processes. Instability of the equilibria may establish the possibility of moving along trajectories to preferred positions. The behaviour of the trajectories approaching such positions, as oscillations periodic or otherwise, may be explored by studying the operation of bifurcation parameters to determine whether such positions are attractors or repellors. The problem extends to determining qualitative change in the dynamic properties of equilibrium shares of wealth under varying conditions of ecospheric sustainability. This paper is prompted by curiousity about the long future of agriculture as the ecosphere is pressured, and dependency on government supports and off-farm income is put in jeopardy by government deficits and economic recession. The problem definition and approach stem from the second generation of systems theory. A predator prey paradigm is used to model the relationship of agriculture to the rest of the economy and the ecosphere. In the event that the ecosphere continues to degrade and productivity differentials between agriculture and industry expand, could chaotic processes emerge to jeopardize the persistence of both agriculture and industry? The transfer of wealth between agriculture and industry is a central theme in development economics. The transfer takes places through shifts of value added attributable to labour, intellectual property, land and capital. Wealth is understood in Adam Smith's terms of the purchasing power for necessities, conveniences and enjoyments of human life. The term agriculture could be generalized to denote all natural resource sectors. These are usually located in rural economies. Industry refers to manufacturing and tertiary sectors, usually associated with urban economies. Debate is ongoing in development economics around sectoral investment priorities based on leading sector hypotheses, dualism and strategies for balanced and unbalanced growth. Comparative statics and market equilibrium modelling, premised on perfect competition, have driven many of the prescriptions for market structures, wages, productivity, extension, training and capital allocations between agriculture and industry. Debate over the prescriptions regularly spills over into trade friction when governments modify competitive advantages of one sector to the other through domestic support programs and border policies. Predator prey modelling appears to offer new insight into a number of persistent questions left unresolved by agricultural economists. Are there substantive economic reasons for government support of agriculture and industry? Government accompanies or directs agricultural development in many jurisdictions globally. Is their reluctance to disengage and allow competitive forces to determine development outcomes based on more than opportunistic lobbying of vested interests? What are the equilibrium and stability conditions underlying the relationships of agricultural to industrial wealth in the long run? What is the effect of ecospheric degradation on the properties of these relationships which could shed light on the sustainability question? Can human determinism influence attainment of these conditions? Are the conditions leading to and away from chaos predictable? The solution of the model presented in this paper suggests that three parametric relationships among economic variables determine the long run tendency either to impoverish or to enrich agriculture and industry. The first is that the terms of trade between agriculture and industry should at least favour agriculture to enable trajectories to move away from both axes in the long run. Second, a scaling parameter representing the productivity for agriculture relative to industry should be near to the value one. Third, the ratio of the growth rate to the rate of degradation of agricultural wealth should be greater than a threshold level of agricultural wealth determined as a composite parameter. This composite is calculated from a fixed industrial cost expressed in terms of a decline in industrial wealth in the absence of agriculture, the price index for industry, and the economic recovery rates for agriculture and industry. All possible trajectories are bounded by parametric asymptotes to the isoclines. The model is formulated mathematically so as to explore the predictability of effects of stability of equilibria on changes in agricultural wealth. This formulation provides for oscillations or \"equilibrium chases\" along trajectories. The outcomes suggest that for economies where industry buys and sells to agriculture, levels of wealth are indeed limited and that the fortunes of industry are favoured by a wealthy sustained agriculture. The alternative, subsistence agriculture, is associated with near zero levels of industrial wealth. Finally, the model demonstrates that agricultural and industrial wealth, while complementing each other in growth processes, may also rise and fall in sustained oscillation relative to each other on a periodic or near periodic basis.
    Subjects: predatory prey paradigm, agricultural wealth
    Date Created: 1994
  10. Old World Wines Revisited: Consumers' Valuation of Spanish and German Wines In the UK Wine Market [Download]

    Title: Old World Wines Revisited: Consumers' Valuation of Spanish and German Wines In the UK Wine Market
    Creator: Steiner, Bodo E.
    Description: The mid 1990s was a pivotal period for the UK retail wine market, as New World Wines started to expand significantly at the expense of Old World Wines. This paper reviews supply and demand-side characteristics of the UK wine market during this period, and the underlying wine labeling scheme, before assessing how wines from Old World wine producing countries were valued by consumers in the British wine market. Following a more detailed discussion of econometric estimation issues, hedonic price analysis is applied in order to analyze consumers' valuation of wine label attributes of Spanish and German wines sold in Britain in 1994.
    Subjects: Germany, UK wine market, Spain, hedonic price models, wine labels
    Date Created: 2009