Three studies in economics

Harvey G. Brooks

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Section I. The impact of the U.S. wheat export enhancement program on the world wheat market. The U.S. Export Enhancement Program (EEP) was included in the 1985 U.S. Food Security Act with a major objective being to increase sales of U.S. agricultural commodities. Through the EEP, the U.S. government subsidizes exports of agricultural commodities to targeted importing countries. The EEP was applied to the majority of U.S. wheat sales in 1987/88 and 1988/89. Coincident with the 1985 act and EEP legislation, U.S. wheat exports have increased significantly. This study uses a nonspatial, partial equilibrium model of world wheat trade to analyze the impact of the EEP on U.S. wheat exports and share of world wheat trade. The study indicates that the effect of the EEP on the wheat market over the period 1986/87 to 1988/89 has been a large displacement of commercial wheat sales (87-92%), with export additionality due to the EEP being only 8-13%. The impact of the EEP on other exporters' wheat trade and importer demand has been small relative to the magnitude of total EEP sales;Section II. Export allocation and price discrimination policies under demand uncertainty. This paper investigates price discrimination policies for a large country disposing of a fixed quantity of output to a certain and an uncertain market. In addition to price elasticities of demand, risk is an important reason for price discrimination. A risk neutral government sets a higher price in the uncertain market than under certainty, but the effect of increased risk aversion is ambiguous. When exports are allocated ex ante, the risk neutral exporter allocates more output in the riskless market than under certainty. The ranking of price and quantity setting policies for foreign disposal of surplus output is generally ambiguous;Section III. An analysis of producer participation in government commodity programs. Participation decisions for profit maximizing producers in voluntary agricultural commodity programs are modeled to investigate the importance of the heterogeneity of land attributes in the participation decision. The comparative static analysis of changes in program parameters on aggregate participation, acreage planted, and input use is completed for a corn-soybean producer. A corn program participation rate equation is estimated using county level data for Iowa that provides support for the hypothesis that heterogeneity of land quality is a significant determinant in the program participation decision.

Date: 1990-01-01
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