Intermediaries play a crucial role in the functioning of agricultural and food markets in developing countries through linking production, imports and storage with consumption. We analyse how competition in the intermediary sector and alternative forms of intermediaries determine the incentives for storage and market outcomes more generally. We apply this framework to the Egyptian wheat sector as an illustrative case study, a country where food security is a priority, where both forms of intermediaries co-exist and undertake storage but where issues of reforms to the role of intermediaries have been raised. Through stochastic simulation, we analyse two changes in government policy: first, the effects of changing the policy instruments with both types of intermediaries undertaking storage; second, relating to market reforms where the private sector replaces the storage function of the parastatal. These issues have wider significance for addressing the interaction between food security and a wide range of policy reforms including de-regulation of parastatals in developing countries.

We address the links between world commodity prices and retail food price inflation, focussing on two aspects. First, since world commodity prices represent a relatively small share of costs of retail food products, retail price behaviour may differ from world commodity prices and other factors (exchange rates and other input costs) will also matter in determining retail food inflation. Second, noting that the world price spike of 2007-2008 was different in the level and duration from the price spike experienced in 2011, we also emphasise an obvious but neglected fact that the effect on retail food price inflation depends on the duration
of the shocks on world commodity markets, not just the magnitude of price spikes (the latter often commanding most attention). Being an open economy reliant on world commodity trade, the UK offers a natural and hitherto unexplored setting for the analysis. Applying time
series methods to a sample of 259 monthly observations over the 1990(9)-2012(3) period we
find substantial and significant long term partial elasticities for domestic food price inflation with respect to world food commodity prices, the exchange rate and oil prices (the latter indirectly via a relationship with world food commodity prices). Domestic demand pressures
and food chain costs are found to be less substantial and significant over our data period.
Interactions between the main driving variables in the system tend to moderate rather than exacerbate these partial effects. Furthermore, the persistence of shocks to these variables markedly affects their effects on domestic food prices.

The Covid-19 pandemic will have impacts that will vary across countries and commodity sectors, reflecting factors such as the importance of trade, differences in the functioning of supply chains and the market which producers and farmers supply. Some of these effects will be relatively short-lived; others will be longer-lasting. In this context, we set out the channels through which food prices will be affected by the Covid-19 pandemic, emphasising the short- and longer-term nature of the main effects. We focus on the UK but the insights extend to other (importing) countries. Drawing on a recent econometric model of UK retail food prices that accounts for both domestic and international factors, we show that the key drivers have potentially off-setting effects, suggesting that the Covid-19 shock to the food sector is likely to be different from previous shocks, particularly the commodity price crises of 2007–2008 and 2011. In many European countries, the Covid-19 pandemic may manifest itself as something of an ‘odd crisis’, in which lower world and farm-gate prices co-exist with higher domestic retail prices. These off-setting factors will frame policy responses targeted at different stages of the food chain across countries.

Complete de-regulation of parastatals is often advocated as a desirable reform, although it is usually opposed by vested interests and by those who perceive that the de-regulated market can be dominated by a small number of private firms. In practice, however, reform and de-regulation of parastatals is typically partial in nature. We specify a model that allows us to consider the effects of partial reform and partial de-regulation on various metrics of food security. We show that how these metrics change depends on the market structure that defines the starting point as well as the market structure that emerges after de-regulation. In this second-best world, partial de-regulation does not necessarily enhance food security and we identify the determinants of that outcome. The assessment of the desirability of de-regulation is also contingent on the food security metric used.

This paper explores the role of tax instruments in affecting foreign direct investment (FDI), paying particular attention on their effect on two forms of FDI strategy, ‘horizontal’ and ‘vertical’. Applying a decomposition of FDI strategies to the universe of cross-border mergers (the dominant form of FDI) over the period 1999–2010, it emerges that taxes have a much more nuanced effect on FDI than frequently suggested; while corporate taxes affect FDI negatively, the tax elasticity varies depending on the FDI strategy (with vertical FDI being in general more responsive), the exact measure of taxation, and international tax considerations (double taxation, withholding taxes). Sales taxes also affect FDI, but only horizontally.

We examine retailer heterogeneity in price adjustment in UK supermarkets. Considerable variation in the price change frequency of identically bar-coded products among retail chains is found. Decomposition analysis suggests that price adjustment is evenly split between sales and reference prices with substantive variation across retailers. © 2014.

This paper contributes to recent research on price dynamics using micro-price data
sets. We emphasize a previously neglected aspect, the role of retailer heterogeneity.
Our key findings are: (i) the frequency of price adjustment and the implied duration of
prices varies considerably across retailers; (ii) price promotions (sales) also vary
across retailers with some retailers seldom using sales, while for others sales are a
common feature of pricing; (iii) the duration of reference prices is-at most-26 weeks
but the duration of reference prices is around 16 weeks for some retailers; (iv)
branded products have shorter durations than private label products; (v)
decomposition analysis suggests price adjustment is evenly split between sales and
reference prices but, for some retailers, reference prices are the main source of price
changes; (vi) there is low correlation between the frequency of price and costs
changes across both products and retailers. Taken together, while confirming the
significance of price stickiness after accounting for sales, price dynamics vary
considerably across retailers. In turn, retailer heterogeneity has important implications
for interpreting aggregate price dynamics in both theoretical and empirical research.

Given the current trend in global emissions, the latest round of climate change negotiations at the Durban meeting of December 2011 (for the adoption of a comprehensive global treaty on climate change mitigation as soon as possible-and no later than 2015-and to come into force in 2020) has hardly shown the results one would have hoped for. Even for the most optimistic, it remains unclear whether one can expect a successful negotiating outcome by 2015. There are inherent difficulties associated with climate change negotiations, ranging from which countries should bear most responsibility for a given emission reduction target to the assessment of a globally efficient time path for pricing harmful greenhouse gas emissions (GHGs). These difficulties become even more complex and challenging under the pervasive uncertainty of climate science and the uncertainty about the feedback loop between climate change damages and economic growth. During the past decades, the environmental economics literature has provided important insights regarding the design of environmental fiscal policies and treaties but there is a host of issues that remain relatively unexplored. For instance, we know little about the cooperative solution for carbon and trade policies when climate change affects the productive possibilities of countries. In this context, it is also not obvious whether observed policies could be improved upon in such a way that all countries gain in welfare. It remains also unclear what the carbon extraction path should be in the absence of a comprehensive treaty (such as, for example, if environmental policy is unilaterally chosen subject to an agreed 'ceiling' in global temperature). Though carbon pricing instruments like carbon taxes, cap-and-trade and hybrids have been well studied, not much is known about their properties in the presence of 'offset' schemes such as the Clean Development Mechanism. More work is also required to understand the strategic implications of the uncertainty surrounding climate change and how this affects, for example, the choice of climate change strategy ('precautionary' or 'wait and see'), how uncertainty impacts the propensity of countries to sign a climate treaty, and the extent to which the possibility of a climate catastrophe fosters or hinders cooperation. Understanding political economy issues is also vital in tackling climate change because efficient climate policies stand little chance of being successfully negotiated and implemented if they do not receive the support of the electorate. The papers in the special issue of the Journal of Environmental Economics and Management are precisely devoted to this broad research agenda. © 2013 Elsevier Inc.

When estimating location choices, Poisson regressions and conditional logit models yield identical coefficient
estimates (Guimarães et al. 2003). These econometric models involve polar assumptions as regards
the similarity of the different locations. Schmidheiny and Brülhart (2011) reconcile these polar cases by
introducing a fixed outside option transforming the conditional logit into a nested logit framework. This
gives rise to a dissimilarity parameter (λ ∈ [0; 1]) equalling 1 in Poisson regressions (with completely
dissimilar locations) and 0 in conditional logit models (with completely similar locations). The dissimilarity
parameter is not identified in Schmidheiny and Brülhart (2011). We show that a choice consistent
normalisation identifies λ and that, with panel data, its estimation is facilitated by adopting a Poisson
regression approach.

AbstractWe review issues concerning the use of state trading enterprises (STEs) as a non‐tariff measure in importing countries. We focus on a tariff equivalent measure that captures the main features of markets where STEs are used, and we identify the factors that influence tariff equivalent effect. We supplement this discussion with case studies highlighting the potential to improve the transparency of trade‐distorting enterprises as employed across importing countries. These studies also highlight that, as the role of the STE changes, so too does the size of the tariff equivalent. Increasing the transparency of STEs can aid the treatment of them in trade negotiations.

in this paper, we consider the potential impact of market power on the likely effects of trade reform and how this may impact on developing country exporters. The emphasis is on trade reform in agricultural markets, one of the principal features of the Doha Round negotiations, and we discuss the mechanisms via which market power will matter for agricultural markets even if those markets themselves are competitive. Using results from a calibrated theoretical model, we show that the existence of downstream market power in vertical chains is likely to dissipate the potential benefits that would accrue to developing country agricultural exporters following trade reform.

This paper explores the issue of a simultaneous reduction in tariffs at different stages of a vertically related
market where each stage is oligopolistic.When vertically related markets are characterized as a successive
oligopoly, reducing tariffs by an equivalent amount on upstream and downstream imports will have a
differential effect on market access and hence profits at each stage as a result of a combination of horizontal
and vertical effects. These differential effects have implications for the tariff structure post-trade reform.

Cross-border acquisitions constitute the main form of foreign direct investment in the world economy, the focus of this paper being to consider the determinants of the location and growth of cross-border acquisitions in the global food sector. The data relates to over 2,000 international acquisitions in the food sector from 45 source to 46 host countries. The results highlight the importance of market size, relative costs and stock market growth as important determinants. We also report differences involving acquisitions in food processing and retailing and higher and lower/middle income countries. Results involving acquisitions in European countries are also highlighted.

The causes and consequences of corruption have attracted much attention in recent years by both academics and policy makers. Central in the discussion on the impact of corruption are perception -based indices. Recent research has shown that perceived corruption might not be a good indicator of actual corruption in a country. In this paper, we employ a structural equation model-that treats corruption as a latent variable that is directly related to its underlying causes and effects-to derive an index of corruption. The index of corruption is derived for approximately 100 countries over the period 1976-1997. Journal of Comparative Economics 35 (3) (2007) 443-466. ETH Zurich, KOF Swiss Economic Institute, Weinbergstrasse 35, 8092 Zurich, Switzerland; CESifo, Germany; School of Business and Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter EX4 4PU, England, UK. (c) 2007 Association for Comparative Economic Studies. Published by Elsevier Inc. All rights reserved.

This paper is concerned with the impact of food scares, principally the BSE crisis in the UK, and focuses on price transmission in vertically related markets. We show that if market power has an effect on the farm-retail margin, this determines the specification of the cointegrating relationship and thus provides a test of market power. The results for the UK beef chain suggest that we cannot reject the importance of market power. The impact of the BSE crisis on farm prices is found to be more than double that on retail prices, thus corroborating public concerns regarding a differential impact of food scares on retailers and producers.

We consider the use of border adjustments to compensate exporters for domestic environmental taxes imposed on an intermediate good. A model of successive oligopoly is used to consider the appropriate border adjustments. In this set-up, the relative importance of the forward incidence of the environmental tax and the backward incidence of the remission play a key role. The results highlight that the simple rule employed by GATT/WTO to set the export remittance equal to the level of the environmental tax is likely to be inappropriate.

Most empirical studies of foreign direct investment (FDI) typically use either a cross-sectional (capturing ownership-specific and industry determinants) or time-series (capturing the determinants of FDI over time) approach. Panel data techniques, however, have the advantage of combining both aspects of the data. Using disaggregated panel data for the UK food sector - a leading recipient of FDI in the UK - the results in this paper highlight the predominance of ownership-specific and industry characteristics in determining the presence of foreign-owned firms in this sector while macro-economic factors have a more marginal effect.

This study examines the interaction between export subsidies and profit-shifting in a vertical production system consisting of agricultural commodity production, and intermediate and final good processing, where the latter two stages may be characterized by imperfect competition. Using a model with general functional forms for demand, comparative statics indicate that an export subsidy to an unprocessed agricultural commodity, under certain circumstances, can have greater profit-shifting effects at the final processing stage compared to an export subsidy targeted at the final processed good.

Recent literature emphasises the role of market structure in determining the degree of price transmission along the marketing chain, the presumption being that if downstream markets are imperfectly competitive price transmission will be less than complete. However, empirical studies of market power often ignore the role of the underlying cost conditions. This paper shows that if an industry is characterised by non-constant marginal costs, there can be a significant impact on price transmission. Specifically, it is shown that the nature of the returns to scale that characterise the food industry cost function may either increase or decrease the degree of price transmission. Under certain conditions, price transmission may be greater in industries with increasing returns to scale than in markets characterised by perfect competition and constant returns to scale.

This paper focuses on the extent to which price changes occurring at the farm-level are transmitted to the retail sector. A price transmission elasticity is derived which is shown to depend on the degree of market power in the food industry and the nature of the food industry's processing technology. The offsetting role of the processing technology and market power in determining the extent of price transmission are highlighted. A case-study reports values for the price transmission elasticity for the US beef and pork sectors.

In a differentiated oligopoly with quantity as the strategic variable, an optimal tariff can lead to a welfare gain. When a quantity restraint is used instead, this gain can be offset, since the quota induces anti-competitive effects. However, alternative quantity restraints, such as impart quotas or voluntary export restraints, whether specified in volume or ratio farm, will influence the strength of the anti-competitive effect. In this paper we evaluate empirically the degree of non-equivalence between alternative trade instruments and the factors that likely influence it.

Analyses of import quota regimes typically ignore institutional features under which the quota licenses are administered. However, distributing the bulk of import licenses to a small number of firms can create oligopsony power and hence affect the level of quota rent and the potential success of auctioning licenses. In this paper I test formally for this phenomenon in the U.S. dairy import quota regime. Results suggest that the administration of import licenses for cheese creates oligopsony power for U.S. cheese importing firms.

Typically. analysis of trade liberalization ignores the impact that intermediate stages in the production and distribution system may have on the pass-through of changes in tariffs to final goods' prices. Using a model of a multi-stage system, this paper shows that both the number of vertical stages and the degree of imperfect competition at any specific stage can affect the degree of tariff pass-through. Simulation of the model with respect to recent changes in the European Union banana regime suggests that ignoring vertical market structure is likely to over-estimate the benefits to consumers of trade liberalization.

Recent discussions on U.S. trade policies suggest that import quotas should be auctioned to ensure the U.S. Treasury acquires the quota rent. However, studies estimating the potential benefits have ignored important details of import quota regimes and have assumed perfect competition and no exporter retaliation. We explore these three issues with an application to the U.S. cheese import quota regime. We show that when features of the U.S. dairy quota regime and structure of the cheese processing sector are accounted for, likely quota rents and potential welfare consequences of selling import licenses change significantly. While quota license sales may raise Treasury receipts, they may also cause a net welfare loss.

This paper evaluates the trade policies introduced into the UK fertilizer market by the UK government and EC Commission in 1987. These policies are assessed in the context of theoretical developments in the analysis of trade policy where markets are imperfectly competitive, Specifically, optimal tariff and tariff-equivalent quota policies are derived. It is found that an optimal tariff policy would have resulted in the highest level of economic welfare, while a quota would have reduced welfare, the latter result being due to the effect of a quota on firms' behaviour. Relative to these policies, the trade restrictions actually imposed were too restrictive and hence failed to maximize economic welfare.

This paper considers the proposals put forward by the EC at the GATT Uruguay Round in December 1990. The EC's objective of rebalancing the Common Agricultural Policy in the context of a partial liberalisation of agricultural support on the world cereals market is assessed, as is the choice of base year from which liberalisation would have been initiated. The US's proposal for more significant reduction in agricultural support is also considered. The results show that the EC would not necessarily have benefited from rebalancing, since the effects would have depended on the choice of base period. For example, with 1986 (1988) as the base year, net welfare changes would have been 20 (50) percent higher (lower) with rebalancing, relative to the case without. Not surprisingly, the more substantial liberalisation proposed by the US would have resulted in greater net welfare gains even if rebalancing was conceded by the US.

Attempts to curtail surplus agricultural production may result in excess capacity for food processors. This paper considers the impact of potential capacity constraints for different specifications of duopoly behaviour. If one firm's capacity is constrained, rents are shifted to the other under quantity competition, while both benefit under price competition. If both firms face capacity constraints, each benefits whatever the nature of competition. Consequently, food processing firms may benefit from cut-backs in agricultural production or quantitative trade restrictions, depending on the nature of strategic interaction, though consumers always lose.

AbstractThe frequent demands for protection by the fertilizer industry in many developed countries may have important implications for the agricultural sector. This paper provides a theoretical justification for government intervention in the fertilizer market in the form of an import tariff against foreign competitors. However, a superior policy would be for the government to counter the competitive distortion that exists in the market. An even better outcome is attained by using both policies simultaneously. Moreover, since the fertilizer industry undergoes continuous structural change, the extent to which optimal policies should vary is also investigated.