Overview

Originally, farm management research and agricultural economics research were the main area of emphasis in ARE Over time, we have placed increasingly greater weight on agricultural economics rather than farm management, but agricultural economics has continued to be a major field in our department. Some aspects we emphasize include:

• Risk and Inventory Management
• The Economics of Production and Technology
• Agricultural Labor
• Agriculture and the Environment

Agriculture is going through processes of a transition. Its share of the GNP has been declining, yet it has become part of a large agribusiness sector that includes input suppliers, major distributors, and manufacturers of value-added food and fiber products. ARE is expanding and developing a program on agribusiness that emphasizes:

• Marketing
• Industrial Organization
• Contracts
• Finance

Two research approaches in Agriculture being taken:

• Advance the state of knowledge on general research issues and use agriculture as a case study to apply our general approaches. For example, ARE faculty have made important contributions over the years to general economic theory regarding decision making under uncertainty, industrialization, market power, contracts, marketing and other areas, and have applied these new theories it to problems of agriculture in California and around the world.
• Conduct research to address crucial, real-world problems California agriculture, the United States and the world. Reality is used for inspiration and that has lead to new problem definitions and analytical approaches. For example, ARE research on issues of water management, pest control and farm workers has contributed to major policy debates and resulted in new analytical approaches.

The work in agribusiness and in agricultural economics is closely linked to agricultural policy issues. We emphasize agricultural and environment issues. Our research on agricultural technologies is closely linked to problems addressed in Intellectual Property Rights and innovation fields. While we mostly concentrate in California and developed countries, the methodologies we develop apply to developing countries and are important for development. Applied econometrics techniques are developed and applied in a lot of our work. Finally, agriculture is a global industry and our research in agribusiness and agricultural economics has a strong overlap with the international economic field.

Courses

ARE 202: Microeconomic Modeling: Agriculture, Natural Resources, Industrial Organization
Course emphasizes how to model and test hypotheses using microeconomic tools. We emphasize problems from agriculture, natural resources, and industrial organization. Jeff Perloff teaches the first half of ARE 202, and Sofia Berto Villas-Boas covers the second half.

First Part:

1. Comparative Statics
2. Competition
   Skills: basic maximization, comparative statics, welfare
3. Monopoly
   Skills: welfare: efficiency vs. equity
   Skills: welfare, Kuhn-Tucker, comparative statics
4. Price Discrimination
   Skills: comparative statics, complex pricing, voting
5. Externalities and Resources
   Skills: welfare, introduction to dynamics
6. Dominant Firm
   Skills: nesting models (competition and monopoly); comparative statics
7. Cartels
   Skills: approximate welfare analysis, hypothesis testing
8. Oligopoly, Game Theory
   Skills: modeling, comparative statics, nesting models, game theory
9. Monopolistic Competition
   Skills: general equilibrium models, second best, nonexistence of equilibrium, Kuhn Tucker
   

Second Half:

1. Equilibrium with Imperfect Information
   Skills: "breaking an equilibrium," nonexistence of equilibrium, second best
   
   1. Monopoly and Provision of Quality (UUT, ch 2).
   2. Asymmetric Information models of product quality (T, ch 2)
      • The moral hazard, the Adverse Selection problem
      • Information Revelation
   3. Imperfect Information and Search models
      • Search costs, Diamond (1971)
      • Salop and Stiglitz (1977), Salop (1977).
   4. Empirical paper session
      Skills:
      • Referee Report guidelines. Example Paper
      • Empirical project question formulation, preliminary results.
      • Division of referee reports and presentations among students.
   5. Imperfect Information, taking Salop and Stiglitz to data
      Skills: Use stata and matlab code:
      Skills: topic 2: recover costs. Perform counterfactual simulations
2. Dynamic Price Competition (T ch 6)
   
   1. Dynamic Price Competition and Tacit Collusion (cont.)
   2. Taking testable reduced form predictions to scanner data
      Skills: Empriical analysis, Testing Hypothesis w/ Reduced Form evidence
3. Vertical Integration and Vertical contracts (T ch 4, CP ch 12)
   Skills:
   • nesting models
   • Theory of the Firm (T ch 2, CP ch 2)
   • Vertical Boundaries of the firm/Theory of the firm
   • Transaction costs, Incomplete Contracting
   • Empirical papers: Joskow, 1987 , Hastings, 2004.
4. Identification of Market Power
   Skills: Estimation of firm markups given beer demand model estimated and assuming firms are "bertrand Nash", and retailers have no margins.
   

Faculty

marketing, empirical industrial organization: market power, vertical contracts

	Peter Berck Fields: Risk, commodity modeling.
	Jeffrey M. Perloff Fields: Industrial organization, trade, labor, marketing.
	Gordon C. Rausser Fields: Finance, agricultural markets, strategy
	Howard Rosenberg Fields: Farm labor market, human resource management, and related policy.
	Jeff Romm Fields: Distribution, growth, and resource sustainability; watershed and basin policy; race and resources.
	Sofia Berto Villas-Boas Fields: Marketing, empirical industrial organization: market power, vertical contracts.
	David L. Sunding Fields: Technology and agricultural resources
	Brian Wright Fields: Ag. policy, crop & catastrophe insurance, commodity markets & futures, market stabilization & storage.
	David Zilberman Fields: Risk, marketing, technology, agricultural resources.

Past Student Placements

2011	Joanne Lee	Economist	Mathematica
2009	Maoyong Fan	Assistant Professor	Miller College of Business	Ball State University
2009	Kristin Kiesel	Assistant Professor	Department of Economics	California State University, Sacramento
2009	Robert Santillano	Researcher	Human Services	Mathematica Policy Research, Inc.
2008	Jennifer Brown	Assistant Professor	Kellogg School of Business	Northwestern University
2008	Rui Huang	Assistant Professor	Agricultural and Resource Economics	University of Connecticut
2005	Guanming Shi	Assistant Professor	Agricultural and Applied Economics	University of Wisconsin, Madison
2004	Yanhong Jin	Assistant Professor	Agricultural Economics	Texas A&M University
2003	Kathy Baylis	Assistant Professor	Food & Resource Economics Group	University of British Columbia, Vancouver
2003	Sean Cash	Assistant Professor	Dept. of Rural Economy	University of Alberta, Edmonton
2003	Greg Graff	Director of Research	Research	Bio-Economic Research Associates, Cambridge, MA
2003	Ximing Wu	Assistant Professor	Department of Agricultural Economics	Texas A&M University