Excess Capacity and Adjustment Potential in U.S. Agriculture

Consumer surplus and producer surplus in fuzzy sense

A study of aggregate bi-modal urban travel supply, demand and network behavior using simultaneous equations with autoregressive residuals

Competition with supply and demand functions

One of the well-known results of orthodox trade theory concerns the ability of exporters and importers to take advantage of less than perfectly elastic demand and supply functions. It is possible to tax imports or exports so that foreign suppliers or foreign demanders pay some of the tax. In this way, it is possible that the national income of a buyer or seller nation can be increased relative to a freetrade position. In fact, with sufficient information on supply and demand functions, one can find the tax that maximizes welfare, the so-called optimum tariff.

The serious obstacles to improve water supply, has caused world debates, seeking some solutions to tackle the problem of shortages in water supply. t. Therefore, programs and policies have focused mainly on appropriate pricing approachof. Since the water industry in Iran has been monopolized by the government, an effective pricing approach is assumed to maximize the social welfare with consideration to the cost. . To consider the mentioned aspects to price water, this study used the Ramsey approach. Thy study estimated the Ramsey price of water used for the agricultural sector in Hamadan province of Iran.To determine the price, the Agricultural water demand function was estimated using time series data for the years 1370-88. Using the estimated demand function the price elasticity of demand was calculated. The water production function was also estimated using time series data for the years 1370-88.In order to estimate supply and demand functions, the ARDL model and Microfit econometric software were used. Using production function and demand function, the marginal cost and price elasticity were calculated. Applying the calculated ratios through MATLAB software, the Ramsey price of water for agriculture was measured. According to the results of this study, in the year 1388 the Ramsey price of water for agriculture was more than the paid price for industry.

Supply and Demand Functions in Inventory Models

Community preferences for deriving aggregate consumption de- mand has been used in international trade theory for many years. Authors like Samuelson [12], Gorman [5], Muellbauer [8], Milne [7], and others, have investigated the problem: under what conditions can individual preferences be aggregated so that there exists a community preference map from which an aggregate de- mand function can be derived. Eisenberg [3] has shown that if the individuals' preferences are homothetic and the distribution of income is fixed, then the aggregate demand function can be derived from a homogeneous and concave utility function. In relationship to E i s e n b e rg's results, Chipman [1] published an article demonstrating that also in terms of the integrability theory, using an approach pioneered by Samu- elson and perfected by Hurwicz and Uzawa, the aggregation of individual demand functions is possible so that the community de- mand function acts as if it were derivable from a single preference ordering. As a basic assumption, Chipman also requires that the consumers' preferences are homothetic. This paper is concerned with the aggregation of individual de- mand functions in terms of the revealed preference analysis. Based on hypotheses according to Uzawa [11], we want to show that if consumers' demand functions are linearly homogeneous in income

A FTER three decades of intensive government efforts to improve the lot of those at the bottom of the economic heap, the poor are very much with us, and many are both ill-fed and ill-housed. The various measures taken to improve housing conditions among the poor remain to be evaluated; habitability laws are an example. These laws regulate the relationship between landlord and tenant in that they require the former to provide housing in habitable conditions. By subjecting a lease to the doctrine of caveat venditor, rather than caveat emptor as was done before at common law, these laws greatly extend the warranty of habitability. They provide tenants with remedies in the form of repair and deduct, rent withholding and receivership laws, supplemented by laws that prohibit retaliatory eviction. Good summaries of these laws can be found in a number of places (American Law Institute's Restatement (Second) of Property, Landlord and Tenant, 1974 and Hirsch et al., 1975). This paper examines the welfare effects of habitability laws with respect to indigent tenants. This examination, carried out within a demand-supply system, must take into account the intricate and unique aspects of housing as a commodity. Housing is a complex commodity having both stock and flow characteristics. Our interest is mainly in the latter, i.e., the flow of housing services, an area with serious measurement problems. Specifically, in the day-to-day world we find data neither on the quantity of rental housing services nor on their price. Therefore, a hedonic approach to rental housing services, which estimates empirical rent functions, is used. In this manner, the distinctive characteristics of a rental unit are measured and expressed in a single quantity which reflects the market's consensus about their relative importance. The hedonic approach can, thus, provide shadow housing quantities and prices. Used in conjunction with conventional demand and supply variables, plus habitability law variables, demand and supply functions will be estimated. Finally, these functions permit statements about the effects habitability laws are likely to have on the welfare of landlords and tenants. Specifically, to the extent that such laws are enforced and lead to improved repair and maintenance, tenants' well-being will be enhanced and an upward shift of the demand function will occur. On the supply side, habitability laws can affect maintenance and repair decisions, which together with the potential legal costs will also lead to an upward shift of the supply function. The crucial matter is the relative shift of these two functions and the statistical significance of their difference.

Agricultural goods are often treated as final goods in applied agricultural trade models. However, many agricultural traded goods are intermediate in nature. In this paper a production theory approach is applied in deriving export supply and import demand functions for the Japanese textile industry. The production theory approach derives import demand and export supply functions from the assumption of profit maximizing (cost minimizing) behavior. The behavioral implications of the profit maximization framework are used to specify producer supply and demand functions which are consistent with economic theory. Flexible functional forms are estimated in the econometric model and the concavity restrictions implied by economic theory are checked and imposed. Elasticities derived from the production theory approach are also compared with results based on a single equation specification of the aggregate import demand equation. A major shortcoming of the single equation approach is the lack of theoretical guidance for choosing the appropriate specification.

China’s marine environmental governance faces a persistent paradox: despite four decades of expanding policy effort and institution building, outcomes have lagged behind expectations. In light of this, we ask whether the core problem lies not in implementation but in a structural imbalance within the policy instrument mix. We develop a Supply–Environment–Demand (SED) framework and apply computational text analysis, combined with framework analysis, to quantify the evolution of, and diagnose structural issues in, marine environmental governance using 57 national-level policies from 1982 to 2024. The findings show that the instrument mix is persistently imbalanced: the Supply, Environment, and Demand functions appear in an approximate ratio of 7:1:1.7, indicating continued Supply-side dominance. Within the Supply function, command-and-control tools—such as bans and penalties—remain foundational, with a recent shift toward planning and zoning. Market-based incentives and property-rights instruments remain underdeveloped and do not scale, while information disclosure on the Demand function expands faster than participatory authority, leaving participation largely procedural. Overall, the system exhibits a structural trilemma—strong supply, anemic environment, and fragmented demand—in which episodic diversification has not produced sustained rebalancing. The governance implication is that policy sequencing and institutional design matter more than adding new instruments. The priority is to embed enforceable ex ante controls and a transparent system for monitoring, reporting, and independent verification through spatial planning, zoning, and legally binding environmental thresholds. On that basis, institutionalize price- and rights-based incentives and enable genuinely empowered public participation so that market signals and social oversight operate effectively at scale. The SED lens thus reframes the implementation gap as a problem of functional allocation and coordination and offers a transferable toolkit for structural rebalancing in coastal jurisdictions.

The aggregate demand and supply (ADAS) diagram has been a hot topic recently. Journal articles have appeared with provocative titles such as "What is the Matter with Aggregate Demand and Aggregate Supply" (Rao, 1991) and "The Use and Abuse of Aggregate Demand and Supply Functions" (Nevile and Rao, 1996). Emotive language such as "dirty pedagogy" has been used to describe its textbook use, and dramatic accusations of internal inconsistency have sought to destroy its credibility. As a modest contributor to this debate (Kennedy, 1996) and an author of textbooks employing the ADAS diagram (Kennedy, 1984, 1997) I seek in this chapter to provide some perspective on this controversy along with a personal view of its status. I begin with a discussion of why the ADAS diagram rose to prominence.

Two issues that have become increasingly important while estimating the parameters of aggregate demand functions to study firm behavior are the endogeneity of marketing activities (typically, price) and heterogeneity across consumers in the market under consideration. Ignoring these issues in the estimation of the demand function parameters can lead to biased and inconsistent estimates for the effects of marketing activities. Endogeneity and heterogeneity have achieved prominence in large measure because of the increasing popularity of logit models to characterize demand functions using aggregate data. The logit model accounts for purchase incidence and brand choice by including a “no-purchase” alternative in the consumer's choice set. This allows for category sales to change as a function of the marketing activities of brands in the category.There are three issues with using the logit model with the no-purchase option to characterize demand when studying competitive interactions among firms. (1) The marketing literature dealing with brand choice behavior at the consumer level has found that the IIA restriction is not appropriate, as each brand in the choice set is more similar to some brands than it is to others. (2) Studies have found that the purchase incidence decision is distinct from the brand choice decision. Hence, it may not be appropriate to model the no-purchase decision as just another alternative in the choice set with the IIA restriction holding across all brands and the no-purchase option. (3) Even if the distinction between the purchase incidence and brand choice decisions is accounted for via, for example, a nested logit specification, accounting for the purchase incidence decision with aggregate data requires assumptions for computing the share of the no-purchase alternative which is otherwise unobserved.In this paper, we propose a probit model as an alternative to the logit model to specify the aggregate demand functions of firms competing in oligopoly markets. The probit model avoids the IIA property that affects the logit model at the individual consumer level. Furthermore, the probit model can naturally account for the distinction between the purchase incidence and brand choice decisions due to the general covariance structure assumed for the utilities of the alternatives. We demonstrate how the parameters of the proposed model can be estimated using aggregate time series data from a product market. In the estimation, we account for the endogeneity of marketing variables as well as for heterogeneity across consumers.Our results indicate that both endogeneity as well as heterogeneity need to be accounted for even after allowing for a non-IIA specification at the individual consumer level. Specific to our data, we also find that ignoring endogeneity has a bigger impact on the estimated price elasticities than ignoring the effects of heterogeneity. A comparison of the elasticities obtained from the probit model with those from the corresponding logit specification indicates that the range of elasticities obtained from the probit model across brands is larger than that obtained from the logit. The results have implications for issues such as firm-level pricing.In addition to specifying a probit model and providing comparisons with the logit model, the paper also addresses the third issue raised above. We propose a simple alternative to the purchase incidence/brand choice specification by decomposing the demand for a brand into a category demand equation and a conditional brand choice share equation. We provide a comparison of results from this specification to those from the specification that includes the no-purchase alternative and find that estimated elasticities are sensitive to the specification used. We also estimate the demand function parameters using a traditional specification such as the double-logarithmic model. Here, we find that the estimated elasticities could be signed in such a manner as to be not useful for firm-level pricing decisions.One of the key limitations of the proposed model is that while it accounts for the purchase incidence and brand choice decisions of households, it does not account for differences across consumers in their purchase quantities. The model and analysis are best suited for product categories in which consumers typically make single-unit purchases. Another limitation is more practical in nature. While recent advances have been made in computing probit probabilities, it could nevertheless be a challenge to do so when the number of alternatives is large.

Implications of Habit Formation for Optimal Monetary Policy

The first key objective of this thesis is to estimate a set of econometric models of Australian broadacre agricultural production by applying the duality theory in production economics. Models of Australian broadacre agriculture are estimated using alternative formulations of econometric modelling of producer decision-making, in which cost minimisation, revenue maximisation and profit maximisation are assumed. A unique, large quasi-micro pooled cross-sectional farm dataset drawn from the Australian Agricultural and Grazing Industries Survey over a sixteen year period, from 1990 to 2005, is used for model estimation. Key policy-relevant outcomes of this investigation are estimates of price elasticities and elasticities of transformation and substitution between broadacre inputs and outputs in Australia. Multi-product dual cost, revenue and profit functions are specified for Australian broadacre agriculture. The multi-product functions are specified to accommodate the prevalent multi-enterprise operation on Australian broadacre farms. The restricted versions of the dual functions are chosen to account for quasi-fixity and the lumpiness of some capital used in broadacre production. The translog and normalised quadratic, the two most popular flexible functional forms in empirical duality applications, are used to specify the dual functions. In addition, impacts of climatic conditions, production focuses, production scales and rainfall on production are also allowed for in the estimated models. Systems of demand and/or supply equations are derived from the specified dual cost, revenue and profit functions and estimated using the quasi-micro dataset available. The estimated systems obtained have reasonable statistical goodness-of-fit with high percentage of statistically significant system coefficients. Price variables are also found to significantly influence input demand and output supply. Importantly, using the normalised quadratic form, the estimated system of input demand derived from the cost function and the estimated system of output supply derived from revenue functions satisfy the theoretical curvature conditions implied by rational economic behaviour. The estimated supply and demand system derived from the profit function violates the curvature condition but the violation is not severe. Input demand and output supply in broadacre farming are found to be fairly inelastic with respect to price changes in the short run. However, demand for fertilisers and crop and pasture chemicals are found to be sensitive to changes in their own prices and in general production costs. The second key objective of this thesis is to investigate three significant issues concerning the application of the duality theory in empirical agricultural production research using data from Australian broadacre agriculture. First, the results obtained from the dual cost, revenue and profit functions are contrasted according to goodness-of-fit, the satisfaction of theoretical regularity conditions and the sensibility of the generated elasticity estimates. The estimation result obtained under the cost minimisation assumption conforms more to economic theory than results obtained under revenue maximisation or profit maximisation. Second, the estimation results are more in line with expectations based on prior economic reasoning when the normalised quadratic functional form is used than when the translog is used. Third, results using data of Australian broadacre farming at two aggregate levels indicate that data aggregation across firms can have a significant impact on research findings, depending on the assumption made regarding the economic behaviour of producers

This article aims to review the application of mathematics in economics regarding the function of demand and supply and market stability. This study uses exploratory methods and data is collected through literature study techniques. The use of demand, supply and market balance problems can be in the form of mathematical concepts in a two-variable linear equation system and the solutions are formed through elimination, substitution, and graphic methods. The study findings explain that the correlation between demand and supply functions is formed from the mathematical concept of linear functions and equations of two variables.