Progress 10/01/08 to 09/30/13
Outputs
Target Audience: My target audience for the project was policy makers at the state and federal levels, as well as producer organizations. Changes/Problems:
Nothing Reported
What opportunities for training and professional development has the project provided?
Nothing Reported
How have the results been disseminated to communities of interest? Several of my papers have been presented at professional conferences or University seminars. Some of the research has been presented in outreach settings (Agricultural Sustainability Institute event with cooperative extension specialists and agribusiness actors, UC Davis Dairy technology day). I have also presented results from interdisciplinary work in academic settings outside my home discipline (Joint ASA/CSSA/SSSA meetings, that is, an audience of agronomists, crop scientists and soil scientists). Finally, I have used the ASI platform to disseminate some of the results of this research (website). What do you plan to do during the next reporting period to accomplish the goals?
Nothing Reported
Impacts
What was accomplished under these goals?
The research enabled by this project has had an impact in academia. A brief google scholar compilation shows that the 7 papers published have gathered a total of 54 citations in a relatively short period of time, or an average of a little more than 7 cites per piece. Most papers are published in prominent journals in the field. In terms of knowledge generated, the project has allowed to investigate from a theoretical and empirical perspective the private benefits and the social costs of various forms of producer cooperation. In the more recent part of the project regarding nitrogen management (last publication below), I have developed a modeling workhorse to address agro-environmental problems arising from cropping systems. This study provides important insights into the likely effects of nitrogen taxes, a policy currently under consideration in California to mitigate nitrate pollution in water (recent report of the State Water Resources Control Board to the California legislature).
Publications
- Type:
Journal Articles
Status:
Published
Year Published:
2009
Citation:
M�rel, Pierre (2009). Measuring market power in the French Comte cheese market. European Review of Agricultural Economics, Vol. 36(1), pp. 31-51.
- Type:
Journal Articles
Status:
Published
Year Published:
2009
Citation:
M�rel, Pierre (2009). On the deadweight cost of production requirements for geographically differentiated agricultural products. American Journal of Agricultural Economics, Vol. 91(3), pp. 642-655.
- Type:
Journal Articles
Status:
Published
Year Published:
2010
Citation:
M�rel, Pierre R. and Richard J. Sexton (2010). Kinked-demand equilibria and weak duopoly in the Hotelling model of horizontal differentiation. The B.E. Journal of Theoretical Economics, Vol. 10, Issue 1 (Contributions), Article 12.
- Type:
Journal Articles
Status:
Published
Year Published:
2009
Citation:
M�rel, Pierre R., Tina L. Saitone and Richard J. Sexton (2009). Cooperatives and quality-differentiated markets: strengths, weaknesses and modeling approaches. Journal of Rural Cooperation, Vol. 37(2), pp. 201-224.
- Type:
Journal Articles
Status:
Published
Year Published:
2011
Citation:
Tomich, T. P., S. Brodt, H. Ferris, R. Galt, W. R. Horwath, E. Kebreab, J. Leveau, D. Liptzin, M. Lubell, P. M�rel, R. Michelmore, T. Rosenstock, K. Scow, J. Six, N. Williams and L. Yang (2011). Agroecology: A Review from a Global Change Perspective. Annual Review of Environment and Resources, Vol. 36, pp. 193-222.
- Type:
Journal Articles
Status:
Published
Year Published:
2011
Citation:
M�rel, Pierre (2011). Institutional Market Power in Comt�: Insights from a Double Marginalisation Model. Journal of Agricultural Economics, Vol. 62(3), pp. 585-603.
- Type:
Journal Articles
Status:
Published
Year Published:
2012
Citation:
M�rel, Pierre and Richard Sexton (2012). Will geographical indications supply excessive quality? European Review of Agricultural Economics, Vol. 39(4), pp. 567-587.
- Type:
Journal Articles
Status:
Accepted
Year Published:
2013
Citation:
M�rel, Pierre, Fujin Yi, Juhwan Lee and Johan Six (accepted). A Regional Bio-Economic Model of Nitrogen Use in Cropping. American Journal of Agricultural Economics, forthcoming.
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Progress 01/01/12 to 12/31/12
Outputs
OUTPUTS: During the review period, I published one journal article relevant to the project in a top field journal in agricultural economics (see publications). I was the main author on the paper. I presented the paper at two professional conferences. I completed and submitted a second manuscript, "A bioeconomic model of nitrogen use in cropping," (at the revise and resubmit stage) which deals with modeling farmers' responses to incentives to reduce nitrogen pollution. This manuscript was presented in various forms at two Universities (UC Davis and ETH Zurich, Switzerland) and at the annual meetings of the American Soil Association where it was part of a sponsored session on the economics of fertilizer use. PARTICIPANTS: I did significant interdisciplinary work during the review period with Johan Six's lab. Johan Six and his post doc Juhwan Lee have been collaborating with my team on three projects related to the issue of sustainability: nitrogen pollution from cropping systems, switchgrass adoption in California and California agriculture's response to carbon markets. In my team, two students (Fujin Yi and Cloe Garnache) and myself have been actively involved in this work. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
In the paper "Will geographical indications supply excessive quality" my coauthor and I investigate the incentives of a producer organization in charge of developing an industry standard to 'overshoot' in terms of quality, that is, to offer a quality level that exceeds the societal optimum. The incentive to provide quality is decomposed into two elementary effects, a demand-enhancing effect and a supply-limiting effect (since quality is costly to supply). We show that under fairly general cost and demand conditions the producer organization will oversupply quality. This finding departs from previous studies linking monopoly with subpar quality and challenges the view that organized industries tend to adopt weak product standards.
Publications
- Merel, Pierre and Richard Sexton (2012). "Will geographical indications supply excessive quality" European Review of Agricultural Economics, Vol. 39, pp. 567-587.
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Progress 01/01/11 to 12/31/11
Outputs
OUTPUTS: During the review period, I published two refereed journal articles. One of them is an interdisciplinary review article directly relevant to agricultural sustainability; the other is a welfare analysis of institutional arrangements within the French Comte cheese market. In terms of outreach, I was invited to present on sustainability policies at the UC Davis Dairy Technology Day II on June 7th, 2011. Dairy Technology Day is an event directed towards dairy industry participants. The theme of the workshop was "Sustainability of the California Dairy Industry". I designed a new presentation, delivered it, and interacted with industry leaders. The presentation was later made available to workshop participants. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: The target audience for my presentation on sustainability policies was a collection of industry leaders (dairy producers and processors). My presentation emphasized the need for GHG abatement policies and used the example of a fertilizer tax as a way to mitigate pollution externalities from agriculture in Yolo County. I presented early results from a model of Yolo County agriculture developed in conjunction with Johan Six (Plant Sciences), which showed the importance of crop reallocation as an important mechanism to reduce nitrogen application at the regional scale. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
My multidisciplinary review article, published in the Annual Review of Environment and Resouces identifies key components and emerging connections within the intellectual landscape of agroecology. We attempt to extend and preview agroecology as a discipline in which agriculture can be conceptualized within the context of global change and studied as a coupled system involving a wide range of social and natural processes. The objective of this review is to identify forward-looking scientific questions to enhance the relevance of agroecology for the key challenges of mitigating environmental impacts of agriculture while dramatically increasing global food production, improving livelihoods, and thereby reducing chronic hunger and malnutrition over the coming decades. My sole-authored article titled "Institutional Market Power in Comte: Insights from a 'Double Marginalization' Model" explores the economic efficiency of a horizontally and vertically coordinated industry where upstream producers are atomized but downstream processors are few, explicitly considering participation incentives and allowing the coordinated industry to exert market power towards buyers. The model offers insight into the likely social impacts of the government-sanctioned supply control scheme in place in the French Comte cheese market, suggesting it falls short of constituting a Pareto-improvement compared to a laissez-faire situation. More generally, the theoretical model provides guidance to identify instances where encouraging industry coordination may be socially desirable.
Publications
- Tomich, T. P., S. Brodt, H. Ferris, R. Galt, W. R. Horwath, E. Kebreab, J. Leveau, D. Liptzin, M. Lubell, P. Merel, R. Michelmore, T. Rosenstock, K. Scow, J. Six, N. Williams and L. Yang. 2011. "Agroecology: A Review from a Global Change Perspective." Annual Review of Environment and Resources, Vol. 36, pp. 193-222.
- Merel, Pierre. 2011. "Institutional Market Power in Comte: Insights from a 'Double Marginalisation' Model." Journal of Agricultural Economics, Vol. 62(3), pp. 585-603.
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Progress 01/01/10 to 12/31/10
Outputs
OUTPUTS: During the review period, I published two articles that are relevant to the project as they pertain to differentiated markets. One of these contributions is of theoretical interest. The other is an application of models of product differentiation to the analysis of competition between an agricultural cooperative and an investor-owned firm. I have also submitted a new paper on vertical links and economic efficiency in geographical indicator markets, with an application to the Comte cheese market. I have written yet another paper on quality choice in geographical indicator markets. In terms of outreach, I am now a participant in a network of academics interested in the development of so-called American Origin Products (AOP). AOP refers to "place-based" agricultural products, that is, products whose essential qualities can be traced to a particular location, and which typically bear the name of this location in their sales denomination. This research and outreach effort is led by the University of Arkansas and supported by a grant from USDA-Rural development. PARTICIPANTS: Not relevant to this project. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Nothing significant to report during this reporting period.
Impacts
My article published in the Journal of Rural Cooperation is co-authored with Tina Saitone and Richard Sexton. The article investigates the decision of a cooperative to supply a quality-differentiated market. The performances of both open and closed membership cooperatives are investigated in a context where products are horizontally differentiated and the cooperative competes with an investor-owned firm. We show that compared to an investor-owned firm, an open cooperative conveys a "yardstick of competition" effect that causes farm price to rise for both members and non-members. Open membership tends to dissipate the benefits from branded production compared to closed membership. The article published in the B.E. Journal of Theoretical Economics revisits some fundamental properties of the Hotelling model of horizontal differentiation with finite consumer reservation prices. Despite its popularity, two key aspects of the model, the existence and characteristics of kinked-demand price equilibria and the non-monotonicity of price as a function of consumers' transportation cost, remain little understood and sources of considerable confusion. This article addresses these interrelated points by (i) identifying the source of the multiple asymmetric equilibria as the unit-demand assumption ubiquitous in this branch of literature and (ii) showing that once smooth consumer demand functions are introduced, a unique symmetric price equilibrium obtains, while the non-monotonicity of price as a function of transportation cost is preserved. This contribution provides a welcome justification to the common practice of focusing exclusively of the symmetric price equilibrium under the unit-demand assumption.
Publications
- Merel, Pierre R. and Richard J. Sexton (2010). "Kinked-demand equilibria and weak duopoly in the Hotelling model of horizontal differentiation." The B.E. Journal of Theoretical Economics, Vol. 10, Issue 1 (Contributions), Article 12.
- Merel, Pierre R., Tina L. Saitone and Richard J. Sexton (2009). "Cooperatives and quality-differentiated markets: strengths, weaknesses and modeling approaches." Journal of Rural Cooperation, Vol. 37(2), pp. 201-224.
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Progress 01/01/09 to 12/31/09
Outputs
OUTPUTS: During the review period, I have focused on the second component of the project, that is, assessment of the market performance of geographical indicator markets. I have developed this line of research both from a theoretical and empirical perspective. The publication of my work has led to dissemination of my results both to an academic audience and to the non-academic world. I have participated in two workshops/round tables around the concept of American geographical indicators organized in Burlington, Vermont, where I have had the opportunity to disseminate my results to an audience mostly comprised of government officials and dairy farmers, but also local actors involved in the development of supply chains for sustainably farmed foods. I was also invited to present my results on market performance in the French Comte cheese market at the University of Madison, WI. I was invited to participate in a workshop on certification of sustainable products and services organized by the National Academies as part of their Science and Technology for Sustainability Program, and sponsored by the David and Lucille Packard Foundation. The workshop was held on January 18th, 2009 and a prepublication report has been issued. PARTICIPANTS: Nothing significant to report during this reporting period. TARGET AUDIENCES: Nothing significant to report during this reporting period. PROJECT MODIFICATIONS: Not relevant to this project.
Impacts
1. In the Comte cheese market, vertical and horizontal coordination of producers to decide on marketed quantities does not seem to have resulted in significant market distortions over the period 1985-2005. Empirical estimates of market power are found to be not statistically significant. 2. Adopting quality standards is a requirement of European protected designations of origin (PDOs). But PDO producer organizations have an incentive to adopt costly production requirements beyond what is necessary to ensure product quality, in order to raise marginal costs and therefore market prices. We investigate the welfare consequences of such behavior in a linearized production model and show that the welfare cost is lower than that resulting from output-fixing behavior. Our finding falsifies a claim made by Lence et al. (American Journal of Agricultural Economics, 2007). It is a bit early to evaluate the impact of the research since the publication of my work is very recent. Still, my study on the Comte cheese market has been cited in discussions within the European Parliament about the future of geographical indications and may make a difference in the design of future regulations pertaining to these markets, particularly with regard to the prerogatives of producer organizations with respect to supply control.
Publications
- Merel, Pierre (2009). "Measuring market power in the French Comte cheese market". European Review of Agricultural Economics, Vol. 36(1), pp. 31-51.
- Merel, Pierre (2009). "On the deadweight cost of production requirements for geographically differentiated agricultural products." American Journal of Agricultural Economics, Vol. 91(3), pp. 642-655.
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