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Estimation Of Supply And Demand Elasticities Of California Commodities

Author

Listed:
  • Russo, Carlo
  • Green, Richard D.
  • Howitt, Richard E.
Abstract
The primary purpose of this paper is to provide updated estimates of domestic own-price, cross-price and income elasticities of demand and estimated price elasticities of supply for various California commodities. Flexible functional forms including the Box-Cox specification and the nonlinear almost ideal demand system are estimated and bootstrap standard errors obtained. Partial adjustment models are used to model the supply side. These models provide good approximations in which to obtain elasticity estimates. The six commodities selected represent some of the highest valued crops in California. The commodities are: almonds, walnuts, alfalfa, cotton, rice, and tomatoes (fresh and processed). All of the estimated own-price demand elasticities are inelastic and, in general, the income elasticities are all less than one. On the supply side, all the short-run price elasticities are inelastic. The long-run price elasticities are all greater than their short-run counterparts. The long-run price supply elasticities for cotton, almonds, and alfalfa are elastic, i.e., greater than one. Policy makers can use these estimates to measure the changes in welfare of consumers and producers with respect to changes in policies and economic variables.

Suggested Citation

  • Russo, Carlo & Green, Richard D. & Howitt, Richard E., 2008. "Estimation Of Supply And Demand Elasticities Of California Commodities," Working Papers 37629, University of California, Davis, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucdavw:37629
    DOI: 10.22004/ag.econ.37629
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    Citations

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    Cited by:

    1. Ferrier, Peyton M. & Zhen, Chen & Bovay, John, 2023. "Price and Welfare Effects of the Food Safety Modernization Act Produce Safety Rule," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 48(1), January.
    2. David Atkin & Benjamin Faber & Thibault Fally & Marco Gonzalez-Navarro, 2024. "Measuring Welfare and Inequality with Incomplete Price Information," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 139(1), pages 419-475.
    3. Pascal L. Ghazalian, 2015. "The New Tomato Suspension Agreement: What Are the Implications for Trade Flows?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 63(3), pages 359-380, September.
    4. Rejesus, Roderick M. & Safley, Charles D. & Strik, Bernadine C, 2014. "Demand and Welfare Impacts of a Potential Food Safety Event in the Blackberry Industry," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169452, Agricultural and Applied Economics Association.
    5. José M. Rodríguez-Flores & Jorge A. Valero Fandiño & Spencer A. Cole & Keyvan Malek & Tina Karimi & Harrison B. Zeff & Patrick M. Reed & Alvar Escriva-Bou & Josué Medellín-Azuara, 2022. "Global Sensitivity Analysis of a Coupled Hydro-Economic Model and Groundwater Restriction Assessment," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 36(15), pages 6115-6130, December.
    6. Seale, James L. & Zhang, Lisha & Traboulsi, Mohamad R., 2013. "U.S. Import Demand and Supply Response for Fresh Tomatoes, Cantaloupes, Onions, Oranges, and Spinach," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 45(3), pages 435-452, August.
    7. Thibault Fally & James Sayre, 2018. "Commodity Trade Matters," 2018 Meeting Papers 172, Society for Economic Dynamics.
    8. repec:oup:apecpp:v:40:y:2018:i:3:p:402-420. is not listed on IDEAS
    9. Grigoryan, Sona & Lopez, Jose, 2018. "An Empirical Analysis of the U.S. Import Demand for Nuts," 2018 Annual Meeting, February 2-6, 2018, Jacksonville, Florida 266538, Southern Agricultural Economics Association.
    10. Nunez, H., 2018. "Building a Bioethanol Market in Mexico," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 275921, International Association of Agricultural Economists.
    11. Ezzat Riham Ahmed, 2017. "Fixed-Mobile Substitution in MENA Countries: The Future of Fixed-Line Markets," Review of Network Economics, De Gruyter, vol. 16(4), pages 387-417, December.
    12. Josué Medellín-Azuara & Richard Howitt & Duncan MacEwan & Jay Lund, 2011. "Economic impacts of climate-related changes to California agriculture," Climatic Change, Springer, vol. 109(1), pages 387-405, December.
    13. Garnache, Cloe & Merel, Pierre R. & Lee, Juhwan & Six, Johan, 2014. "Markets for Agricultural Greenhouse Gas Offsets: The Role of Policy Design on Abatement Efficiency," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 170718, Agricultural and Applied Economics Association.
    14. Asci, Serhat & Ramaswamy, Karthik & Devadoss, Stephen & Konduru, Srinivasa P., 2020. "Modern Time Trade Wars: Chinese Retaliatory Tariffs vs California’s Tree Nuts industry," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304532, Agricultural and Applied Economics Association.
    15. Santeramo, Fabio Gaetano, 2014. "On the Estimation of Supply and Demand Elasticities of Agricultural Commodites," MPRA Paper 56126, University Library of Munich, Germany.
    16. Atkin, David & Faber, Benjamin & Fally, Thibault & Gonzalez-Navarro, Marco, 2020. "A New Engel on Price Index and Welfare Estimation," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt5rn3m26v, Department of Agricultural & Resource Economics, UC Berkeley.
    17. Iuliia Ogarenko & Klaus Hubacek, 2013. "Eliminating Indirect Energy Subsidies in Ukraine: Estimation of Environmental and Socioeconomic Effects Using Input–Output Modeling," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 2(1), pages 1-27, December.
    18. Garnache, Cloe & Merel, Pierre R., 2012. "Carbon market policy design: Investigating the role of payments aggregation," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124960, Agricultural and Applied Economics Association.
    19. Kuhns, Annemarie & Leibtag, Ephraim & Volpe, Richard & Roeger, Ed, 2015. "How USDA Forecasts Retail Food Price Inflation," Technical Bulletins 206500, United States Department of Agriculture, Economic Research Service.
    20. Itai Trilnick & David Zilberman, 2021. "Microclimate Engineering for Climate Change Adaptation in Agriculture: The Case of California Pistachios," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(4), pages 1342-1358, August.

    More about this item

    Keywords

    Agribusiness; Agricultural and Food Policy; Consumer/Household Economics; Crop Production/Industries; Demand and Price Analysis; Marketing;
    All these keywords.

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