DEPARTMENT OF AGRICULTURAL AND APPLIED ECONOMICS

THE UNIVERSITY OF GEORGIA

AGRICULTURAL MARKET STRUCTURE AND ANALYSIS

AAEC 8400

INSTRUCTOR: Jack E. Houston. Jr. -- 312D

COURSE CONTENT: The role of agricultural markets and evaluation of structure, conduct, and performance in the U.S. agribusiness sector. Economic theory and research tools in the agricultural marketing literature will be reviewed. Market coordination and associated policy issues are investigated.

TEXT: D.W. Carlton and J.M. Perloff. Modern Industrial Organization. 3^rd Edition. New York, NY: Addison Wesley Longman, Inc., 2000.

GRADING:

Mid-Term Test 20%

Oral Presentation--A review/critique of an 20%

assigned reading

Written Paper-a brief paper, including 30%

literature review, analyzing an agricultural structure/

performance topic

Final Exam 30%

LECTURES TOPICS

1 Perspectives on the role and nature of marketing

2-4 Consumer behavior; Market demand & supply

3-4 Firm behavior

6-8 Competition and monopoly, cooperative behavior

9-10 Oligopoly, noncooperative behavior, industry performance

4-5 Pricing, strategic behavior

2-3 Information and advertising

3-5 Dynamic models, market clearing

3-4 Government policies, antitrust, regulation

2 Exams

___________________________________________________________________________

AAEC 8400 AGRICULTURAL MARKET ANALYSIS

I. Oral presentation-

Review/Critique

Select a journal article on the reading list from the 4th or following sections which is not a required (*) reading.

Prepare a class presentation of the article to cover:

Problem/Hypothesis

Objectives of paper/study

Outline methodology (or more interesting/important aspects)

Results and conclusions

Critique of strengths/weaknesses/biases and the importance of article.

Time allowed: 25-30 minutes, including question/discussion generated (brief)

II. Written Paper -

Choose a structure/performance topic from the literature or that you have a special interest in and develop a research paper acceptable for presentation at regional or national professional meetings, agric. econ. or agribusiness.

Include:

1. Problem Description - nature of the problem or hypothesis related to the topic of your study. (2-3 pages)

2. Objectives of the study - brief outline of what you hope to accomplish in the study (1-2 paragraphs)

3. Related Research - literature relevant to the problem and/or the methodologies used in the proposed study. (2-3+ pages)

4. Research Procedure - the methodology to be used in the study, related forseeable problems, expected or actual results. (3-4 pages, including results, for paper)

5. Conclusions, Significance and Potential Use - summary of the usefulness or the conclusions of the study. (1+ page)

6. References, AJAE format.

Approximately 10-15 pages in length, appropriate to topic proposed or professional audience targeted.

List of Course References

Books:

1. Bain, J.S. Industrial Organization, 2nd ed. New York: John Wiley and Sons, Inc., 1968. HD 31 B32 1968.

2. Benassy, J.P. The Economics of Market Disequilibrium. Orlando, FL: Academic Press, Inc., 1982.

3. Conner, J.M. et al. The Food Manufacturing Industries: Structure, Strategies, Performance, and Policies, Lexington, MA: Lexington Books, 1985.

4. Dixit, A., and B. Nalebuff. Thinking Strategically. New York: W.W. Norton & Co., 1991.

5. Farris, P.L. (ed.) Future Frontiers in Agricultural Marketing Research. Ames, IA: Iowa State Univ. Press, 1983.

6. Hicks, J.R. Value and Capital. London: Oxford Univ. Press, 1957. HB171 4631V 1946.

7. Johnson, S.R., Z.A. Hassan, and R.D. Green. Demand Systems Estimation. Ames: Iowa State Univ. Press, 1984.

8. Kilmer, R.L. and W.J. Armbruster. Economic Efficiency in Agricultural and Food Marketing. Ames, IA: Iowa State Univ. Press, 1987.

9. Marion, B.W. et al. The Organization and Performance of the U.S. Food System. Lexington, ME: Lexington Books, 1986.

10. Martin, L.R. (ed.) A Survey of Agricultural Economics Literature. Volume 1, Traditional Fields of Agricultural Economics, 1940s to 1970s. Minneapolis: Univ. of Minnesota Press, 1977.

11. . A Survey..., Volume 3. Minneapolis: Univ. of Minnesota Press, 1981.

12. McCalla, A.F., and T.E. Josling. Agricultural Policies and World Markets. New York: Macmillan Pub. Co., 1985.

13. McCalla, A. F., and T. E. Josling (eds.). Imperfect Markets in Agricultural Trade. New Jersey: Allenheld, Osmun & Co., 1981.

14. McGee, J.S. Industrial Organization. Englewood Cliffs, NJ: Prentice-Hall, Inc., 1988.

15. Osborne, M.J. and A. Rubinstein. Bargaining and Markets. San Diego, CA: Academic Press, Inc., 1990.

16. Rausser, G. (ed.) New Directions in Econometric Modeling and Forecasting U.S. Agriculture. New York: North-Holland, 1982.

17. F. M. Scherer and David Ross. Industrial Market Structure and Economic Performance. 3rd Edition. Boston: Houghton Mifflin Co., 1990.

18. Telser, L.G. Theories of Competition. New York: North-Holland, 1988.

19. Varian, H.R. Microeconomic Analysis. 3rd edition. New York: W.W. Norton & Co., 1991.

Monograph/Bulletin/Paper:

1. George, P. S., and G. A. King. "Consumer Demand for Food Commodities in the U.S. with the Projections for 1980," Giannini Foundation Monograph No. 26, March, 1971. S465 C35.

2. Dahl, R.P. "Structural Changes in the United States Grain Marketing System." Univ. of Minn., Dept. of Agric. & App. Econ. Staff Paper P91-35, Sept., 1991.

3. Gallo, A.E. "The Food Marketing System in 1990." U.S.D.A./E.R.S. Bulletin No. 632, August, 1991.

Journal Articles:

1. Archibald, S.O., A.F. McCalla, and C.O. McCorkle. "Trends in the U.S. Food- Processing Industry: Implications for Modeling and Policy Analysis in a Dynamic Interactive Environment." AJAE, 67(1985):1149-1154.

2. Bateman, D.I. "Agricultural Marketing: A Review of the Literature of Marketing Theory and Selected Applications," Journal of Agricultural Economics, 27(1976):171-225. HD1401.J68.

3. Breimyer, H.F. "The Economics of Agricultural Marketing: A Survey," Review of Marketing and Agricultural Economics, 41(1973):115-165. HDlOl.R4.

4. Buccola, S.T. "Pricing Efficiency in Agricultural Markets: Issues, Methods, and Results." WJAE, 14(1989):111-121.

5. Christensen, C., and L. Witucki. "Food Problems and Emerging Policy Responses in Sub-Saharan Africa," AJAE, 64(1982):889-896.

6. Clodius, R., and W. Mueller. "Market Structure Analysis as an Orientation for Research in Agricultural Economics," Journal of Farm Economics. 43(1961):515-553. S560.J861.

7. Comanor, W., and T. Wilson. "The Effect of Advertising on Competition: A Survey,"Journal of Economic Literature, (1979):453-476. REF Z7164 E2J86.

8. Conner, J., D. Heien. J. Kinsey, and R. Wills. "Economic Forces Shaping the Food-Processing Industry," AJAE 67(1985):1136-1142.

9. French, B.C. "Fruit and Vegetable Marketing Orders: A Critique of the Issues and State of Analysis," AJAE, 64(1982):916-923.

10. Gardner, B.L. The Farm-Retail Price Spread in a Competitive Food Industry. AJAE57(1975):399-409.

11. Johnson, A.C., and P. Helmberger. "Price Elasticity of Demand as an Element of Market Structure. American Economic Review, (Dec., 1967):1218-1221. HBl, A512.

12. Kilmer, R.L. "Vertical Integration in Agricultural and Food Marketing," AJAE, 68(1986):1155-1160.

13. Machlup, F. "Theories of the Firm: Marginalist, Behavioral, Managerial," American Economic Review, March, 1967. HBl.A512.

14. Martin, L. "Comparing International Market Performance: Conceptual and Measurement Issues," AJAE, 62(1980):889-909.

15. O'Rourke, A.D., and W.S. Greig. "Estimates of Consumer Loss Due to Monopoly in the U.S. Food-Manufacturing Industries: Comment," AJAE. 63(1981):285-289.

16. Parker, R.C., and J.M. Connor. "Estimates of Consumer Loss Due to Monopoly in the U.S. Food-Manufacturing Industries," AJAE. 61(1979):626-639.

17. Raikes, R., and A. Heubrock. "Impacts of Market Share Patterns on Marketing Firm Costs," AJAE 58(1976):693-702. S560.J861.

18. Schrader, L.F. "Responses to Forces Shaping Agricultural Marketing: Contracting,"AJAE, 68(1986):1161-1166.

19. Sexton, R.J. "Cooperatives and the Forces Shaping Agricultural Marketing," AJAE68(1986):1167-1172.

20. Tomek, W.G. "Limits on Price Analysis," AJAE 67(1985):905-915.

21. Ward, R.W. and B.L. Dixon. "Effectiveness of Fluid Milk Advertising Since the Dairy and Tobacco Adjustment Act of 1983," AJAE 71(1989):730-740.

22. Zellner, J.A. "A Simultaneous Analysis of Food Industry Conduct," AJAE71(1989):105-115.

Others to be added, as applicable.

Lecture Topics and Reading Assignments

Required readings are denoted by an asterisk(*). Additional readings cover similar material and may assist understanding, broaden background, or offer alternative interpretations and/or methods. Required readings are on reserve in the Departmental Reference Room, Conner Hall (please sign out all copies). Copies of most additional readings are also available. Lecture numbers are based on meeting 3 hours a week.

Lecture Hr. Topic and Readings

1 Perspectives on the role and nature of marketing

1. *Carlton & Perloff, Chapter 1

2. *Scherer, Chapter 1

3. Breimyer, Rev. Of Mkt. & Ag. Econ., 1973, pp. 115-65

4. Farris, Chapters 1, 8

5. *Martin, Vol. 3, pp. 503-18

6. Bateman, J. of Ag. Econ., 1976, pp. 171-225

7. McGee, Chapter 1

2-5 Consumer behavior; market supply, demand

1. *Varian, Chapters 1, 3, 4 or equivalent

2. *Hicks, Chapters 1-3

3. *George & King, pp. 1-28

4. Johnson, Hassan, Green, Chapters 1-3, 5.

5. Conner et al., AJAE, v. 67, pp. 1136-1142

6-8 Firm behavior

1. *Varian, Chapters 2 & 6, or equivalent

2. *Carlton & Perloff, Chapter 2

3. *Machlup, AER, 1967, pp. 1-33

4. Scherer, Chapters 2 & 5

5. McGee, Chapters 2 & 3

6. Martin (ed.), Vol. 1 pp. 94-206 (French)

7. Johnson & Helmberger, AER, 1967, pp. 1218-21

9-16 Competition and monopoly, cooperative oligopoly conduct

1. *Carlton & Perloff, Chapters 3, 4, & 5

2. *Varian, Chapter 2, or equivalent

3. Scherer, Chapter 2

4. McGee, Chapters 4, 5, 6(129-35), 10

5. Parker & Connor, AJAE. V. 61, pp. 626-39

6. O'Rourke & Greig, AJAE. V. 63. pp. 285-86

17-22 Oligopoly, noncooperative conduct, industry structure and performance

1. *Carlton & Perloff, Chapters 6-8

2. *Bain, Chapters 1 & 2

3. *McCalla, Chapter 2, pp. 9-23

4. McGee, Chapters 7, 9-16

5. Farris, Chapter 2

23 Mid-term

24-32 Oligopoly, industry conduct, industry performance (cont.)

1. Scherer, Chapters 3(56-74), 4(81-111, 141-50),

8-11, 14, 15 & 17

2. Gardner, AJAE, V. 57, pp. 399-409

3. Raikes & Haubrock, AJAE., V. 58, pp. 693-702

4. Kilmer, AJAE, V. 68, pp. 1155-1160

5. Schrader, AJAE, V. 68, pp. 1161-1166

6. Clodius & Mueller, JFE, 1961, pp. 515-53

7. French, AJAE, V. 64. No. 5, pp. 916-23

8. Ward & Dixon, AJAE, 1989, pp. 730-40

9. Zellner, AJAE, 1989, pp. 105-15

10. Martin, AJAE. V. 62, pp. 889-909

11. Marion, Chapters 4 & 5

12. Gallo, USDA/ERS Bulletin No. 632

13. Dahl, U.Minn. Staff Paper P 91-35

14. Telser, Chapters 3-5, 8

33-37 Pricing, strategic behavior, vertical integration

1. *Carlton & Perloff, Chapters 9, 11, 12

2. *Tomek, AJAE, V. 67, pp. 905-915

3. Scherer, Chapter 11

4. Buccola, WJAE, V. 14, pp. 111-121

5. Dixit & Nalebuff, esp. Chapters 4-6, 9-11

6. Osborne & Rubinstein, esp. Chapters 1-4, 7

7. Telser, Chapter 7

37-38 Information, advertising, disclosure

1. *Carlton & Perloff, Chapters 13 & 14

2. Varian, Chapter 8

3. Scherer, Chapter 14

4. Kilmer & Armbruster, Chap. 9 (Antonovitz & Roe)

5. Comanor & Wilson, J. Econ. Litt., 1979, pp. 453-76

39-42 Dynamic models, market clearing

1. *Carlton & Perloff, Chapter 17

2. Telser, Chapter 6

43-45 Government regulation, antitrust, trade

1. *Carlton & Perloff, Chapters 18-20

2. *Martin (ed.), V. 1, pp. 295-328 (Johnson)

3. *McCalla, Chapter 6, pp. 87-112 (Sarris)

4. Scherer, Chapters 20 & 21

5. McGee, Chapters 18, 19(447-57), 20(480-83)

6. Christensen & Witucki, AJAE. V. 64, pp. 889-96

7. Rausser & Just, Chapter 11 in Rausser

8. Archibald et al., AJAE, V. 67, pp. 1149-1154

9. Sexton, AJAE. V. 68, pp. 1167-1172

10. Marion, Chapters 6 & 7