Standards for Development: Food Safety and Sustainability in Wal‐Mart's Honduran Produce Supply Chains

Public‐private partnerships between supermarket retailers and development agencies help small‐scale producers reach growing domestic markets in developing countries. Drawing on qualitative data that focuses on relationships between producers, development agencies, and Wal‐Mart‐owned supermarkets in Honduras, the research presented here demonstrates how, by introducing food safety standards to development agencies' outreach efforts, but without necessarily certifying producers or offering a price premium, Wal‐Mart uses these standards to simultaneously differentiate production practices by promoting quality, while maintaining a standardized market. As a result, the responsibility and costs for incentivizing growers to change their practices is shifted to nongovernmental organizations. Therefore, although an extensive body of literature describes standards and third‐party certification systems as the means for corporations to control production practices, this research indicates that public‐private partnerships are a new vehicle by which corporations can influence agricultural production practices. In addition, this article argues that the inclusion of food safety standards in development projects leads to the conflation of food safety and sustainability, without adequately interrogating which agroecological processes food safety standards include and exclude. Therefore, retailers' private food safety standards dominate how sustainability is perceived and practiced in the development context.     

THE IMPORTANCE OF TRADE COSTS IN DEVIATIONS FROM THE LAW‐OF‐ONE‐PRICE: ESTIMATES BASED ON THE DIRECTION OF TRADE

The full impact of trade costs in segmenting product markets cannot be captured by considering aggregate prices or in the absence of information on the direction of trade. We address this problem by utilizing product‐specific prices, cross‐sectional productivity indices, and bilateral trade flows, allowing us to identify the probable source of any one product. We show that trade costs in the form of transportation and distribution costs are important in determining international price differences and segmenting international markets. Physical distance relative to the origin has a precisely estimated positive impact on international deviations from the Law‐of‐One‐Price that is larger than estimates that do not account for the origin of each product. Based on our benchmark estimates, the price elasticity of distance was around 10% in 1990. (JEL F4)     

STACKELBERG, COURNOT AND COLLUSIVE MONOPOLY: PERFORMANCE AND WELFARE COMPARISONS

This article compares and evaluates performance and welfare in three classical oligopoly models: Stackelberg leader, Cournot, and collusive monopoly. Hahn's stability conditions render an unambiguous ranking of market price; the monopoly price is highest and the Stackelberg price is lowest. Welfare comparisons are less clear-cut due to additional effects coming from reallocation of outputs among sellers. Conditions under which these reallocation effects will enhance or offset the unambiguous price effects on welfare are discussed and examples are given. Possible implications for antitrust policy, regarding constraints on market share of large producers in noncompetitive markets, are examined.     

Strategies to Improve the World Food Programme's Revenue Mobilisation and Procurement Practices

Currently, a vast majority of WFP food procurement is executed through spot markets, which exposes it to substantial commodity and transport price risk as well as significant delays in delivery. The WFP also has limited flexibility owing to unpredictable revenue mobilisation, partly driven by restricted donor contributions. However, a significant portion of its operations are fairly predictable – both in terms of countries and delivery volumes. There are several types of derivatives contracts available at commodities exchanges that can facilitate strategic hedging. Greater commitments of untied cash donations from the US and other major donors can give the WFP significant operational flexibility to execute prudent financial management operations without damaging local food markets.     

The urban market of Açaí fruit (Euterpe oleracea Mart.) and rural land use change: Ethnographic insights into the role of price and land tenure constraining agricultural choices in the Amazon estuary

This paper examines the recent development of the açaí fruit economy in regional Amazonian urban markets (as a staple food) and more recently among national and international consumers (as a fashion food) and the consequences for agroforestry intensification by Caboclo communities in the Amazon estuary. The paper is based on long-term ethnographic research and field experiments; the açaí fruit economy is discussed from agricultural, social, and economic perspectives; attention is given to its historical development, the structure of açaí fruit production, its agents, the relationship among themselves and the urban market. Decadal price performance is presented for açaí fruit and açaí transportation costs and compared to major agropastoral products for the Eastern Amazon region. Dominant views about the economic rationality of rural producers' decision-making are discussed. Açaí fruit has performed as well as and in some cases surpassed most agro-pastoral products of the Northern region. Economic returns for producers reflect linkages between price signals from urban markets, harvesting decision, and land tenure condition of the producer. Urban markets for the fruit is expanding and bringing new participants to the açaí fruit economy further conditioning the ability of rural producers to take advantage of external markets for forest products. Discussion of factors conditioning agricultural development and integration between urban and rural areas conclude the article.     

Sub‐Saharan African Cotton Policies in Retrospect

Calls for liberalising cash‐crop sectors in sub‐Saharan Africa have been voiced for decades, yet the impact of reforms remains elusive in empirical studies. This article offers new opportunities for solving this problem by creating precise and consistent market organisation indices for 25 African cotton markets from 1961 to 2008. The aggregation of scores reveals interesting trends: markets are no more competitive today than in the late 1990s, 50% of production still originates from markets with fixed prices and reforms are giving rise to a new type of regulated market in both East and West Africa.     

IMPOSED HEALTH INSURANCE IN MONOPOLISTIC MARKETS: A THEORETICAL ANALYSIS

The impact of public health insurance on price and output of medical care is analyzed within the context of monopolistic markets for health services. An important result, which is not obtained in competitive markets, is that indemnity benefits cause smaller price increases than service benefits, both directly and indirectly through the effect of benefit structure on the production of information. Various types of price regulation are considered, including limitation to "usual, customary, and prevailing" levels, a frequently used technique. With a simple dynamic model this type of regulation is shown to cause chronic price inflation.     

Reconfiguring ‘post‐socialist’ regions: cross‐border networks and regional competition in the Slovak and Ukrainian clothing industry

The global garment industry is currently being reshaped in dramatic ways through processes of trade liberalization, delocalization and interfirm and interregional competition. There has been much speculation about the increasing importance of factor (especially labour) costs in fuelling further rounds of de‐localization of garment production towards low‐cost production locations, such as China and India. However, the extent to which these processes mean the end to garment production in higher factor‐cost locations, including those neighbouring the major clothing markets of the USA and the EU, is open to question. In this article we interrogate the interregional shifts in garment sourcing taking place in Europe and its surrounding regions. While factor costs (including labour) are important determinants of the geography of sourcing, a range of other costs (logistical and policy costs) are important in structuring the geographies of global and regional production. Firms in the Slovak Republic are responding to increasing competitive pressures and we assess how trans‐border sourcing, subcontracting and FDI are being integrated into strategies to sustain European production networks. We highlight the emergence of cross‐border production relocation to Ukraine as one specific strategy. We examine the product specificity of these changes and the ways in which they are embedded within already existing production networks, forms of cross‐border contracting and central European trade regimes. In other words, we explore some of the forces that shape the somewhat tentative continuation of garment production for export to EU markets in central Europe despite the ‘spectre of China’.     

Sociological Factors Affecting Agricultural Price Risk Management in Australia*

Abstract The highly volatile auction system in Australia accounts for 85 percent of ex‐farm wool sales, with the remainder sold by forward contract, futures, and other hedging methods. In this article, against the background of an extensive literature on price risk strategies, we investigate title behavioral factors associated with producers' adoption of price risk‐management strategies (specifically futures and forward contracts) for selling wool. This research presents a behavioral model based on Diffusion of Innovations, the Theory of Reasoned Action, and the Theory of Planned Behavior. We found that the auction system is used as a price risk‐management tool because other selling methods are considered more risky. We also report on a curious relationship between risk and complexity in terms of wool producers' intentions to use forward contracts. We explored sociological factors in conjunction with focus‐group data in an attempt to understand this relationship. This exercise yielded some interesting findings on the impact that trust, habit, social cohesion, and networks have on decision making in the rural community. The significance of this article lies in its application of core sociological theory in a new research context: the Australian wool industry.     

Overcoming Market Constraints on Pro‐Poor Agricultural Growth in Sub‐Saharan Africa

In sub‐Saharan Africa, there is fairly broad agreement that increased investment in key public goods such as roads and communications infrastructure, agricultural research and water control will be required if revitalised agricultural development is to take place. However, it has proved more difficult to reach agreement on what needs to be done to improve the performance of agricultural markets. In this article we set out an agenda for investment and policy reform in this area, providing a brief theoretical examination of the co‐ordination problems involved before examining in turn demand and supply constraints affecting smallholder farmers, and policies for price stabilisation and the co‐ordination of support services. We also argue that increased attention needs to be paid to governance issues.     

MEDIA CONCENTRATION AND CONSUMER PRODUCT PRICES

This article examines the interaction of commercial media and retail producers of well-known consumer products when advertising is used to differentiate brands. In particular, I address how competition in the media market affects choices of advertising and program quality. The results suggest counterintuitively that advertisers may actually prefer media markets with less competition for audiences. Product differentiation through advertising is more effective when media markets are less competitive, leading to higher prices for advertised products. As a result, media concentration may lead to higher profits for advertising firms if the additional revenue exceeds the higher advertising costs associated with media concentration. (JEL L11 , L82 , M37 )     

STICKY WAGES AND IMPLICIT CONTRACTS: A TRANSACTIONAL APPROACH

Sticky wages have been explained in the recent implicit contracts literature as a risk shifting device. Risk averse employees purchase insurance via an implicit contract from risk neutral firms. This paper offers an alternative explanation of the phenomenon. Various alternative organizational forms for labor markets are analyzed from a transactions cost viewpoint. Observed labor market institutions (including sticky wages) are seen as ways to economize on transactions costs. In fact, it is argued that sticky wages would be observed even if workers were risk neutral. Thus the emphasis on risk shifting in the implicit contracts literature seems misplaced.
A fall (in price) arising from temporary distress will be attended probably with no correspondent fall in the rate of wages: for the fall in price, and the distress, will be understood to be temporary, and the rate of wages, we know, is not so variable as the price of goods.     

Consumer attitudes towards switching supplier in three deregulated markets

The efficiency of deregulated markets is jeopardized by consumers failing to switch supplier to the extent that would be beneficial to them. In order to disentangle the determinants of failures to switch, the present study investigates consumers’ motives for negative attitudes towards switching in the deregulated Swedish markets for electricity, landline telecom, and home insurance. Based on the results of a mail survey of a random sample of 458 household consumers, reliable measures were constructed of attitude towards switching supplier, loyalty to the incumbent, information search costs to compare suppliers, and expected economic benefits from switching. A negative attitude towards switching supplier was shown to increase with loyalty, increase with information search costs and decrease with expected economic benefits. Attitude towards switching was more negative in the electricity market than in the other markets and more negative in the landline telecom market than in the home insurance market. The differences between markets were accounted for by differences in loyalty, information search costs, and expected economic benefits.     

The role of relationships in labor markets for the popular arts and its impact on product quality

While utilizing social networks is common in labor markets and may benefit both firms and laborers, social networks are argued to be unusually important in the popular arts. Prior work in economics on the role of relationships in labor markets has generally focused on the benefits and not the costs. This paper takes a different approach by focusing on both costs and benefits, by examining a specific market where relationships are particularly important. This paper argues that in addition to reducing diversity and creating inherent inequalities, excessive reliance on networks can lead to higher agency costs and lower product quality.     

TOXIC NEIGHBORS: FORECLOSURES AND SHORT‐SALES SPILLOVER EFFECTS FROM THE CURRENT HOUSING‐MARKET CRASH

Do home foreclosures and short sales equally affect neighbors? On average, no‐default homes sell anytime up to 6 months after sales of foreclosed neighbors suffer a cumulative spillover effect of about 10%. Including the market trend, the total effect increases to 40%. Controlling for foreclosure effects, short sales do not produce additional spillover effects. We apply a modified hedonic model to estimate spillover effects on neighbors, using January 2008 to June 2009 home transactions from one of the most impacted housing markets. Our findings apply to severely “thin” markets and may not be true for stable markets. We show that accurate estimates of spillover effects require correcting for the market trend, two types of time and spatial price interdependence, and the endogenous neighborhood price. (JEL R21, R22, R31, K2)     

Income Diversity,Technology Choice and Agricultural Research Policy in Sub‐Saharan Africa

This article makes an initial analysis of the implications of income diversification for technical change and agricultural research policy in Africa, leading to two insights. First, that the dilution effect of income diversification means that, as the proportion of non‐farm income increases, so must the expected gains from adopting a new agricultural technology. Second, that diversified producers will face disproportionately large transactions costs associated with information acquisition to inform technology choice decisions. Two hypotheses about how diversified producers are likely to react are then explored. Both point to the conclusion that income diversification among the poor is likely to constrain significantly the direct poverty impacts of agricultural research. The policy implications of these findings are then considered.     

Branded Solidarity in Fair Trade Communication on Facebook

The objective of fair trade to achieve economic justice through markets depends on establishing, via moral education, bonds of solidarity between Northern consumers and impoverished Southern producers. Moral education is increasingly realised by commercial brands who take advantage of the opportunities offered by social media. This article analyses the discursive construction of solidarity in the brand communication of Pukka (UK) and Pizca del Mundo (Poland) on Facebook. It identifies 3 discourses of solidarity: ‘solidarity through legitimation’, which presents the rationale for solidarity with Southern producers; ‘solidarity through affinity’, which constructs a moral economy between Southern producers and Northern consumers; and ‘solidarity through lifestyle’, which proposes everyday actions that can be undertaken by consumers to support Southern producers. These discourses are employed by the brands to different extents, with Pizca del Mundo attempting to establish a fair trade market in Poland and Pukka with an aim to increase sales of their fair trade products. The article concludes that primarily the discourses of ‘solidarity through legitimation’ and ‘solidarity through affinity’ serve moral education whose objective is to generate sustained commitment towards Southern producers as distant others.     

ALL‐PAY AUCTIONS WITH A BUY‐PRICE OPTION

This paper studies all‐pay auctions in which there is a buy‐price option for bidders to guarantee purchases at a seller‐specified price. We analyze symmetric increasing bidding equilibria in the first‐ and second‐price all‐pay auctions with the buy‐price option. While the optimal buy‐price in the second price is higher than are those in the first‐price all‐pay auction, both formats maintain the same expected profit. With an endogenous entry process, all‐pay auctions with the buy‐price can attract more consumers and ultimately reach a higher expected profit than does the uniform posted‐price selling mechanism. (JEL D44, L11, L81)     

Will Australian workers' compensation insurance management get better soon?

A study of Australian experience in the state of New South Wales (NSW) suggests that private sector underwriting of workers' compensation insurance risk plus insurer competition on premium price may put downward pressure on benefits for injured workers, inhibit rehabilitation, and cause related cost increases for taxpayers and employers. Insurer underwriting also increases workers' compensation administrative costs and means an unnecessary loss of investment income for government and industry. An emerging and better alternative for the Australian community is for government and industry to underwrite a national workers' compensation scheme and to fix premium and benefit requirements which are competitively administered by insurers. In such a regulatory environment insurer inability to compete on premium price should promote competition to provide effective services to help employers prevent injury, assist rehabilitation and contain cost. National standards are necessary to enable widespread dissemination of comparable, reliable information on the outcome of health, rehabilitation, dispute resolution and return to work services. This is required to assess the competitive performance of service providers in order to ensure effective operation of the market to achieve scheme objectives. Holistic, multi-skilled and objective rehabilitation professionals are needed who can clearly demonstrate the effectiveness of their actions in assisting injury prevention, worker rehabilitation, and safe return to work across a range of industry contexts.     

QUALITY DIFFERENCES,THIRD‐DEGREE PRICE DISCRIMINATION,AND WELFARE

We propose a model with two markets to analyze the welfare implications of price discrimination with quality differences. In each market a local firm that operates in that market only competes against a global firm that operates in both markets. Local firms produce higher‐quality goods than the global firm. If the quality levels of the local firms' products are the same, price discrimination is never welfare‐decreasing. If they differ, discrimination is welfare‐increasing if quantity increases. Because of a positive allocation effect of price discrimination, there are parameter values such that welfare increases while total output decreases with price discrimination. (JEL D43, D60)