The Derived Demand Curve Fora Productive Factor and the Industrysupply Curve

Muth, Richard F.

doi:10.1093/oxfordjournals.oep.a040951

Cited by 162 publications

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“…5 Our model is similar to equilibrium displacement models or Muth models (Muth 1964) in that we estimate the percentage change in quantity from an exogenous factor using elasticity parameters to approximate the market response. In other words, equation (18) indicates the percentage change in acreage due to expected base updating relative to the percentage change in acreage from a 100% increase in the price of corn.…”

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confidence: 99%

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

Hendricks

Sumner

2014

American J Agri Economics

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We develop a dynamic model to assess the effects of policy expectations on crop supply and illustrate the approach with estimates of the effects of base updating in U.S. crop programs. For corn and soybeans in the Corn Belt, the effect of base updating is relatively small because relevant crop alternatives are subject to similar policies and the alternatives are substitutes in production. Increasing acreage of one program crop to capture future payments from base updating reduces future payments from the alternative crop. We also use our model to assess the effect of base updating on acreage response to prices.

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confidence: 99%

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

Hendricks

Sumner

2014

American J Agri Economics

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“…The modeling framework linking trade and environmental impacts in this study is a so-called market (equilibrium) displacement model as introduced by Muth (1964) and Floyd (1965). In general, it is a comparative static model based on total differentiation of a system of equations but manipulated to be expressed in terms of elasticities rather than slopes.…”

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confidence: 99%

Risks and opportunities from key importers pushing for sustainability: the case of Indonesian palm oil

et al. 2017

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Growing concerns in the major importing countries on the socio-environmental sustainability of oil palm farming may affect the import demand of palm oil and hence the economy of the exporting countries. This paper develops a comparative static, partial equilibrium model to examine the impact of potential reductions in EU imports of Indonesia's palm oil on palm oil output, prices, factor markets, trade, deforestation, and peatland conversion in Indonesia. Results suggest that there would be only small impacts on the major environment-economic variables in Indonesia in a scenario with a moderate reduction EU import demand, for example, due to sustainability concerns. However, the impacts would be more profound if sustainability concerns also affect other import regions and trigger a similar decline in import demand in other markets. The way forward for Indonesia and other palm oil producers and exporters is to adopt a common set of sustainability criteria, encompassing the elements of transparency, regulatory compliance, best agricultural practices, environmental responsibility, the livelihood of small farmers, as well as human and community rights.

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“…Asterisks denote percentage change throughout the article. The specification of a demand shift is the horizontal equivalent of Muth's (1964) description of a vertical demand shift, which appears in his seminal paper that introduced the EDM, and is a common specification of a demand shift in EDMs. It can also be traced back to Leontief's definition of "Niveauverschiebungen" (Shifts of level) in his (unsuccessful) theory for deriving supply and demand curves from price and quantity data only (Leontief 1929).…”

Section: Supply and Demand Shiftsmentioning

confidence: 99%

Disentangling supply and demand shifts: the impacts on world salmon price

Brækkan

2014

Applied Economics

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To understand price changes one must determine the relative impact of supply and demand shifts on price. Conditional on pre-determined supply and demand elasticities, we retrieve yearly shifts in regional supply and demand. The relative impact on price from each supply and demand shift is determined through an Equilibrium Displacement Model (EDM). This procedure is applied on a yearly basis for the world salmon market in the period from 2002 to 2011. The results indicate a large variation in demand and supply growth both over time and between regions. While average annual price impacts from supply or demand shifts from most regions were not statistically significant, price impacts from supply or demand shifts for specific periods are detected in all but one region. This indicates the use of smooth trend indicators is likely to be inappropriate for measuring supply and demand shifts and their impacts on price.The procedure presented in this paper can be a useful instrument for determining the relative impacts of supply and demand shifts on price in any market with unstable price behaviour.

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The Derived Demand Curve Fora Productive Factor and the Industrysupply Curve

Cited by 162 publications

References 0 publications

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

The Effects of Policy Expectations on Crop Supply, with an Application to Base Updating

Risks and opportunities from key importers pushing for sustainability: the case of Indonesian palm oil

Disentangling supply and demand shifts: the impacts on world salmon price

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