scholarly journals Estimating the Market Power of Traders in the Arabica Coffee Value Chain in Lam Dong, Vietnam

2021 ◽  
pp. 102-108
Author(s):  
Nguyen Thi Tuoi ◽  
Nguyen Phu Son ◽  
Pham Le Thong
Keyword(s):  
Market Power ◽  
Value Chain ◽  
Agricultural Sector ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Advanced Degrees ◽  
Stochastic Cost Frontier ◽  
Cost Frontier ◽  
Coffee Market ◽  
Constant Returns To Scale

Although some studies have assessed the market power of advanced degrees in Vietnam’s agricultural sector, this research only focuses on analyzing the level of market concentration through CR4 or HHI indexes. The stochastic cost frontier can estimate market power using the Lerner ratio when input price data are not available and with or without constant returns to scale. Thus, the stochastic cost frontier with a maximum likelihood approach of Kumbhakar et al. (2012) is used to assess the market power of traders in the coffee value chain in Lam Dong province, Vietnam. The estimated market power and Lerner rate results are 0.0001. This index shows that the local coffee market is a market with perfect competition. So the traders do not have market power. Thus, there is no collusion between coffee traders to lower the purchase price for farmers or increase the price for processors and exporters. An RTS ratio of 0.96 (less than one) shows that the return to scale for traders is decreasing. This number proves that the degree of competition in the local coffee market among traders is very high.

Estimating Productivity When Primal and Dual TFP Accounting Fail: An Illustration Using Singapore's Industries

2004 ◽  
Vol 4 (1) ◽  
Author(s):  
Hiau Looi Kee
Keyword(s):  
Productivity Growth ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Growth Accounting ◽  
Tfp Growth ◽  
General Production ◽  
Structural Regression ◽  
Primal And Dual ◽  
Factor Shares ◽  
Constant Returns To Scale

Abstract For both primal and dual TFP growth accounting to properly account for productivity growth, assumptions of constant returns to scale and perfect competition are necessary. This paper shows that without these assumptions, while both TFP growth accounting measures remain equal if factor shares are constant, they are also equally bad at measuring productivity growth. This paper proposes a structural regression to estimate productivity growth based on more general production and cost functions. Using Singapore's industries as illustrations, this paper finds that the assumptions are widely rejected, and the estimated productivity growth exceeds both the accounting measures. When the same methodology is applied to the aggregate Singapore data, the estimated productivity growth is 4.4 percent per year, significantly higher than that of Young's (1992) and Hsieh's (2002).

scholarly journals Very Simple Mathematical Model of MMT (Modern Monetary Theory)

2021 ◽  
Vol 11 (3) ◽  
pp. 78
Author(s):  
Yasuhito Tanaka
Keyword(s):  
Technological Progress ◽  
Budget Deficit ◽  
Full Employment ◽  
Returns To Scale ◽  
Perfect Competition ◽  
Monetary Theory ◽  
Budget Deficits ◽  
Growing Economy ◽  
The One ◽  
Constant Returns To Scale

The purpose of this paper is to provide a concise theoretical and mathematical foundation for the major parts of the debate in the recently discussed school of economics called Modern Monetary Theory (MMT), while maintaining the basics of the neoclassical microeconomic framework, such as utility maximization of consumers using budget constraints and utility functions, and equilibrium of demand and supply of goods under perfect competition with constant returns to scale technology. By a two-periods overlapping generations (OLG) model in which the economy grows by technological progress, we will show that: 1) We need a budget deficit to achieve full employment with constant price when the economy grows by technological progress. This budget deficit should not be offset by future surplus; 2) A budget deficit that exceeds the level necessary to maintain full employment in a growing economy with constant price will cause inflation. A stable budget deficit is required to prevent further inflation; 3) A budget deficit that is insufficient to maintain full employment will cause a recession with involuntary unemployment. A budget deficit larger than the one necessary and sufficient to maintain full employment without a recession can overcome a recession caused by insufficient budget deficit and restore full employment. The deficit created to overcome the recession should not be offset by subsequent surpluses, since full employment can then be maintained through constant budget deficits.

Market power and returns to scale in farm-value share determination

2019 ◽  
Vol 11 (1) ◽  
pp. 70-78 ◽  
Author(s):  
Ling Ma ◽  
Alexander Nuetah ◽  
Xiuqing Wang
Keyword(s):  
Market Power ◽  
Returns To Scale ◽  
Content Type ◽  
Equilibrium Displacement Model ◽  
Constant Return ◽  
Exogenous Shocks ◽  
Constant Returns To Scale ◽  
Oligopsony Power

Purpose The purpose of this paper is to investigate the role of market power and returns to scale in the determination of farm-value share. Design/methodology/approach This paper utilizes the equilibrium displacement model to investigate the role of market power and returns to scale in the determination of farm-value share. Contrary to the current literature, the paper incorporates oligopoly power, oligopsony power and non-constant return to scale into one generalized model, which systematically enables us investigate the impacts of market power on the determination and changes of farm-value share. Findings The results imply that market power as well as non-constant returns to scale is central to the understanding of farm-value share. These, in turn, indicate that ignoring the impacts of market power and degree of return to scale may overestimate or underestimate the impacts of exogenous shocks on changes in farm-value share. Originality/value Thus, to the best of the authors’ knowledge, no literature has examined the co-existence of oligopsony power, oligopoly power as well as non-constant return to scale in farm-value share determination. This paper therefore tries to fill this gap.

scholarly journals AN ENDOGENOUSLY DERIVED AK MODEL OF ECONOMIC GROWTH

2018 ◽  
Vol 22 (8) ◽  
pp. 2182-2200
Author(s):  
Christian Jensen
Keyword(s):  
Economic Growth ◽  
Steady State ◽  
Returns To Scale ◽  
Profit Maximization ◽  
Perfect Competition ◽  
Production Processes ◽  
Input Use ◽  
Integer Problem ◽  
Ak Model ◽  
Constant Returns To Scale

When the returns to scale of a production process vary with the intensity it is operated at, an AK model with constant returns to scale in production arises endogenously due to replication driven by profit maximization. If replication occurs at the efficiency-maximizing scale, as with perfect competition, the result applies also when the number of production processes must be discrete, thus, overcoming the so-called integer problem. When competition is imperfect, there is only convergence toward the AK model for large enough input use, so an economy is more prone to stalling in a steady state without growth, the smaller and less competitive it is.

A Macroeconomic Analysis of Agricultural Sector in Nigeria

2019 ◽  
Vol 5 (1) ◽  
pp. 18-25
Author(s):  
Isah Funtua Abubakar ◽  
Umar Bambale Ibrahim
Keyword(s):  
Value Chain ◽  
Crop Production ◽  
Agricultural Sector ◽  
Time Series Data ◽  
Tourism Industry ◽  
Series Data ◽  
Size Analysis ◽  
The Real ◽  
Real Gdp ◽  
The Impact

This paper attempts to study the Nigerian agriculture industry as a panacea to growth as well as an anchor to the diversification agenda of the present government. To do this, the time series data of the four agriculture subsectors of crop production, livestock, forestry and fishery were analysed as stimulus to the Real GDP from 1981-2016 in order to explicate the individual contributions of the subsectors to the RGDP in order to guide the policy thrust on diversification. Using the Johansen approach to cointegration, all the variables were found to be cointegrated. With the exception of the forestry subsector, all the three subsectors were seen to have impacted on the real GDP at varying degrees during the time under review. The crop production subsector has the highest impact, however, taking size-by-size analysis, the livestock subsector could be of much importance due to its ability to retain its value chain and high investment returns particularly in poultry. Therefore, it is recommended that, the government should intensify efforts to retain the value chain in the crop production subsector, in order to harness its potentials optimally through the encouragement of the establishment of agriculture cottage industries. Secondly, the livestock subsector is found to be the most rapidly growing and commercialized subsector. Therefore, it should be the prime subsector to hinge the diversification agenda naturally. Lastly, the tourism industry which is a source through which the impact of the subsector is channeled to the GDP should be developed, in order to improve the impact of such channel to GDP with the sole objective to resuscitate the forestry subsector.

scholarly journals Do traders learn to select efficient market institutions?

2021 ◽  
Author(s):  
Carlos Alós-Ferrer ◽  
Johannes Buckenmaier ◽  
Georg Kirchsteiger
Keyword(s):  
Returns To Scale ◽  
Production Costs ◽  
Switching Behavior ◽  
Double Auction ◽  
Trading Behavior ◽  
Market Institutions ◽  
Market Institution ◽  
Simple Rules ◽  
Rules Of Thumb ◽  
Constant Returns To Scale

AbstractWhen alternative market institutions are available, traders have to decide both where and how much to trade. We conducted an experiment where traders decided first whether to trade in an (efficient) double-auction institution or in a posted-offers one (favoring sellers), and second how much to trade. When sellers face decreasing returns to scale (increasing production costs), fast coordination on the double-auction occurs, with the posted-offers institution becoming inactive. In contrast, under constant returns to scale, both institutions remain active and coordination is slower. The reason is that sellers trade off higher efficiency in a market with dwindling profits for biased-up profits in a market with vanishing customers. Hence, efficiency alone might not be sufficient to guarantee coordination on a single market institution if the surplus distribution is asymmetric. Trading behavior approaches equilibrium predictions (market clearing) within each institution, but switching behavior across institutions is explained by simple rules of thumb, with buyers chasing low prices and sellers considering both prices and trader ratios.

Sign in / Sign up

Export Citation Format

Share Document