DEPARTMENT OF FOOD, AGRICULTURAL & RESOURCE ECONOMICS
UNIVERSITY OF GUELPH
FARE*6930: FOOD FIRMS, CONSUMERS AND MARKETS I
Instructor: Rakhal Sarker
Office: 318 J.D. MacLachlan
Ext.: 52173
E-Mail: [email protected]
Fall, 2015
Office Hours:
Thursdays: 10:30 - 12:30/appointment
• OBJECTIVES:
The primary objective of this course is to enhance students’ ability to apply economic theory to
advanced analyses of the behaviour of firms and consumers in markets for agri-food commodities.
It also presents an opportunity for students to build their research capacity through the choice of an
appropriate analytical framework and relevant data to test economic hypotheses related to the
behaviour of food firms, consumers and other market participants. A student can also investigate
the performance of different agri-food markets. The main focus of this course will be on the
application of microeconomic theory to address issues related to agri-food markets. At the
conclusion of this course, students should be able to:
• apply microeconomic theory to conceptualize research problems encountered while
studying the markets for food and agricultural commodities;
• critically assess relevant literature, alternative empirical approaches and identify the
most appropriate quantitative approach/method for an empirical problem/issue related to
the markets for food and agricultural commodities;
• formulate and test hypotheses related to the behaviour of firms, consumers and other
economic agents involved in food and agricultural markets; and;
• highlight the “gap(s)” in the literature, frame the research question, collect relevant
data, conduct econometric analysis and then develop and communicate the results.
• PREREQUISITES:
ECON*2310 or equivalent, and ECON*3740 or equivalent.
• ORGANIZATION:
This course will be conducted in a lecture plus group discussion format. A learner-centred,
problem-based approach to instruction will be employed in this course. The class meets on
Tuesdays and Thursdays at 2:30 - 4:00 p.m. in Room #101 J.D. MacLachlan Building.
1
•ASSESSMENT:
• Assignments (3) .............................................................................................................15%
•
Midterm
Exam
(October
20,
2015)
.................................................................................20%
• Term Paper (Due Dec., 03, 2015) .................................................................................25%
• Final Exam (Date & Time TBD) ......................................................................................
40%
• E-Mail Communication: As per university regulations, all students are required to check their
<uoguelph.ca> email account regularly.
• When You Cannot Meet a Course Requirement: When you find yourself unable to meet
an in-course requirement because of illness or compassionate reasons, please advise the course
instructor in writing, with your name, id #, and email contact. See
http://www.uoguelph.ca/registrar/calendars/graduate/current/genreg/sec_d0e1400.shtml for details.
• Course Evaluation: The policy of the Department of Food, Agricultural and Resource
Economics with respect to Course Evaluations and the Course Evaluation Form are available on
the departmental web page. The course evaluation will take place during the last two weeks of the
semester.
• Religious Obligation: If you experience a conflict between your religious obligation and a
scheduled test, mid-term or final examinations, you must contact the instructor within two weeks
of the distribution of the course outline to make an alternative arrangement.
•Academic Misconduct: The University of Guelph is committed to uphold the highest standards
of academic integrity and it is the responsibility of all members of the University community faculty, staff and students, to be aware of what constitutes academic misconduct and how to prevent
academic offences from occurring. It is your responsibility as a student to be aware of and abide by
the University’s policy regarding academic misconduct which is detailed in the Graduate Calendar.
See http://www.uoguelph.ca/registrar/ calendars/graduate/current/genreg/sec_d0e1687.shtml for
details.
• Drop Date: The last date to drop this course is Friday, November 6th, 2015.
• Recording of Materials: Class lectures and other presentations related to this course cannot be
recorded in any electronic media without the permission of the presenter.
• READING MATERIAL:
There is no required textbook for this course. However, selected readings will be drawn from
different textbooks and journals.
• COURSE WEBSITE:
2
The web-site for this course (http://courselink.uoguelph.ca) will contain course material and
some reading materials.
• ASSIGNMENTS:
While students are encouraged to consult fellow students and work in groups, all assignments and
the term paper in this course will be individual. Therefore, each student is required to hand in
his/her own assignment and the term paper, written in his/her own words. Term paper
provides an opportunity to develop and enhance your research capacity. Each student is required to
select an agri-food marketing issue of his/her choice, critically assess the literature and frame a
research question and develop a research proposal [due on September 29th in class]. Once the
research proposal is approved by the instructor, students are required to select the appropriate
analytical framework, collect relevant data, do empirical analysis and present the results in class on
December 1st, 2015. The final term paper is due on December 3rd, 2015. The presentation will be
worth 10% while the final term paper will be worth 15% of your total grade. The term paper is
expected to have a high quality. An ideal term paper would be publishable with minor changes to
it in a leading agricultural economics journal (such as, the Canadian Journal of Agricultural
Economics, Journal of Agricultural Economics or Agricultural Economics).
• EXAMINATIONS: The mid-term will be an in-class exam on October 20, 2015. The date
of the final exam will be determined at a later date during the Semester. The final exam will be
comprehensive. All exams in this course are closed book.
3
COURSE CONTENTS
I. MARKETS, FUNCTIONS OF MARKETS AND EFFICIENCY
*Houck, J.P. 1984. Market: A Definition for Teaching. Western Journal of Agricultural
Economics, 9(2): 353-356.
*Tomek, W. G., and K. L. Robinson. 2003. Mechanisms for Discovering Prices. In Agricultural
Product Prices, 4th Edition, W.G. Tomek and K.L. Robinson, Ithica, NY: Cornell
University Press.
*Rausser, G., J. Perloff and P. Zusman. 1987. The Food Marketing System: The Relevance of
Economic Efficiency Measures. In Kilmer, R. L. And W. Armbruster eds. Economic
Efficiency in Agricultural and Food Marketing. Ames, Iowa: Iowa State University Press.
II. MARKETING MARGINS AND FARM-RETAIL PRICE SPREAD
*Gardner, Bruce L. 1975. The Farm-Retail Price Spread in a Competitive Food Industry. American
Journal of Agricultural Economics, 57(3): 399-409. (Classic Paper).
*Fisher, Brian S. 1981. The Impact of Changing Marketing Margins on Farm Prices. American
Journal of Agricultural Economics, 63(2):261-263.
Holloway, Garth J. 1991. The Farm-Retail Price Spread in an Imperfectly Competitive Food
Industry. American Journal of Agricultural Economics, 73(4): 979-989.
*Wohlgenant, M., and J. Mullen. 1987. Modeling the Farm-Retail Price Spread for Beef. Western
Journal of Agricultural Economics (now JARE), 12(1): 119-125.
Wohlgenant, Michael K. 2001. Marketing Margins: Empirical Analysis. Chapter 16 in Handbook
of Agricultural Economics, Vol. 1B, Bruce Gardner and Gordon Rausser (Eds.), pp.
933-970. Amsterdam: North-Hollan, The Netherlands.
Brester, G. And J. Marsh. 2001. The Effect of U.S. Meat Packing and Livestock Production
Technologies on Marketing Margins and Prices. Journal of Agricultural and Resource
Economics, 26(2): 445-462.
*Marsh, J. and G. Brester. 2004. Wholesale-Retail Marketing Margin Behaviour in the Beef and
Pork
Industries. Journal of Agricultural and Resource Economics, 29(1): 45-64.
*Capps, Jr., O., P. Byrne and G. Williams. 1995. Analysis of Marketing Margins in the U.S. Lamb
4
Industry. Agricultural and Resource Economics Review, 24(2): 232-240.
III. MARKETING OVER SPACE:
*Tomek, W.G., and K.L. Robinson. 2003. Spatial Price Relationships. In Agricultural Product
Prices, 4th Edition, Chapter 8, W.G. Tomek and K.L. Robinson, Ithica, NY: Cornell
University Press.
*Houck, James P. 1992. The Partial Equilibrium Setting for Trade Policy Analysis. Chapter 4 in
Elements of Agricultural Trade Policies. Prospect Heights, III: Wayland Press, Inc.
*Houck, James P. 1992. Currency Exchange Rates and Trade Policy. Chapter 15 in Elements of
Agricultural Trade Policies. Prospect Heights, III: Wayland Press, Inc.
Fackler, Paul L., and Barry K. Goodwin. 2001. Spatial Price Analysis. Chapter 17 in Handbook
of Agricultural Economics, Vol. 1B, Bruce Gardner and Gordon Rausser (Eds.), pp.
971-1024. Amsterdam: North-Hollan, The Netherlands.
IV. AGRI-FOOD MARKET INTEGRATION
Stigler, G.J. and R. A. Rosen. 1985. The Extent of the Market. Journal of Law and Economics,
27: 555-585.
Perry, M. 1989. Vertical Integration: Determinants and Effect. In Handbook of Industrial
Organization, Volume 1, edited by R. Schmalensee and R. Willig. Amsterdam: Elsevier
Science Publishers.
*Goodwin, B. And T. Schroeder. 1991. Cointegration Tests and Spatial Price Linkages in
Regional Cattle Markets. American Journal of Agricultural Economics, 73: 452-464.
Sexton, R.J., C.K. Kling and H.F. Carman. 1991. Market Integration, Efficiency Arbitrage and
Imperfect Competition. American Journal of Agricultural Economics, 73: 568-580.
*Asche, F., H. Bremnes and C. Wessells. 1999. Product Aggregation, Market Integration and
Relationship Between Prices: An Application to World Salmon Markets. American
Journal of Agricultural Economics, 81: 568-581.
*Baulch, B., H. Hansen, L. Trung and T. Tam. 2008. The Spatial Integration of Paddy Markets in
Vietnam. Journal of Agricultural Economics, 59(2): 271-295.
Alexander, C. And J. Wyeth. 1994. Cointegration and Market Integration: An Application to the
Indonesian Rice Market. Journal of Development Studies, 30(2): 303-328.
5
V. PRICE TRANSMISSION: VERTICAL & SPATIAL
*Griffith, Gary and N. Piggott. 1994. Asymmetry in Beef, Lamb and Pork Farm-Retail Price
Transmission in Australia. Agricultural Economics, 10(3): 307-316.
*Kinnucan, H., and D. Zhang. 2015. Notes on Farm-Retail Price Transmission and Marketing
Margin
Behaviour. Agricultural Economics, 46(7): 1-9.
*Ben Kaabia, M., and J.M. Gil. 2007. Asymmetric Price Transmission in the Spanish Lamb Sector.
European Review of Agricultural Economics, 34(1): 53-80.
Mayer, J. and S. von Cramon-Taubadel. 2004. Asymmetric Price Transmission: A Survey. Journal
of Agricultural Economics, 55(3): 581-611.
Lee J. And M. Gomez. 2013. Impacts of the End of the Coffee Export Quota System on
International-to-Retail Price Transmission. Journal of Agricultural Economics, 64(2):
343-362.
*Serra, T., and B. K. Goodwin. 2003. Price Transmission and Asymmetric Adjustment in the
Spanish Dairy
Sector. Applied Economics, 35: 1889-1899.
*McLaren, A. 2015. Asymmetry in Price Transmission in Agricultural Markets. Review of
Development
Economics, 19: 415-433.
VI. APPLIED DEMAND ANALYSIS:
Greene, W.H., and J. Alston. 1990. Elasticities in AIDS Models. American Journal of
Agricultural Economics, 72(3): 442-454.
*Lee, J., M. Brown, and J. Seale. 1994. Model Choice in Consumer Analysis: Taiwan, 1970-1989.
American Journal of Agricultural Economics, 76(3): 504-512.
*Magnusson, E., and J. Cranfield. 2005. Consumer Demand for Pesticide Free Food Products in
Canada: A Probit Analysis. Canadian Journal of Agricultural Economics, 53(1): 67-81.
*Marsh, T., T. Schroeder and J. Minert. 2004. Impacts of Meat Products Recalls on Consumer
Demand in the USA. Applied Economics, 36(??): 897-909.
Moschini, G., 1998. The Semi-Flexible Almost Ideal Demand System. European Economic
6
Review, 42(2): 349-364.
*Verbeke, W., and, R. Ward. 2001. A Fresh Meat Almost Ideal Demand System Incorporating
Negative TV Press and Advertising Impact. Agricultural Economics, 25(4): 359-374.
*Arnot, C., P. Boxal and S. Cash. 2006. Do Ethical Consumers Care About Price? A Revealed
Preference Analysis of Fair Trade Coffee Purchases.
Canadian Journal of Agricultural Economics, 54: 555-565.
VII. ANALYSIS OF SUPPLY RESPONSE IN AGRICULTURE
*Nerlove, M. 1956. Estimates of the Elasticities of Supply of Selected Agricultural Commodities.
Journal of Farm Economics, 38(2): 496-509.
*Nerlove, M. 1979. The Dynamics of Supply: Retrospect and Prospect. American Journal of
Agricultural Economics, 61(5): 874-888.
Colman, D. 1983. A Review of the Arts of Supply Response Analysis. Review of Marketing and
Agricultural Economics, 51(3): 201-230.
*Meilke, K. and A. Weersink. 1990. The Impact of Support Program on Crop Area Responses.
Canadian Journal of Agricultural Economics, 38(4): 871-898.
*Hallam, D. and R. Zanoli. 1993. Error Correction Models and Agricultural Supply Response.
European Review of Agricultural Economics, 20(1): 151-166.
(* indicates Required Reading)
Varian, H. 1997. How to Build an Economic Model in Your Spare Time. In Michael Szenberg
edited, Passion and Craft: Economists at Work, University of Michigan Press.
7