Advances in the Economic Modeling of Agriculture and Natural Resources
Skolrud, Tristan Del
MetadataShow full item record
In the first chapter, I introduce a modification of the Fourier Flexible form. In terms of limiting function specification error, this form is preferable to functional forms based on second-order Taylor series expansions, such as the translog or normalized quadratic. The Fourier Flexible form is most commonly represented as a truncated Fourier series expansion appended to a second-order expansion in logarithms. By replacing the logarithmic expansion with a Box-Cox transformation, I show that the Fourier Flexible form can reduce approximation error by 25% on average, with more significant reductions in certain cases. The new functional form also allows for nested testing between some of the most commonly implemented functional forms in empirical work.In the next chapter, I investigate the role of technology in the decision of dairy farmers to convert to organic production methods. I estimate an input distance function using stochastic frontier analysis to measure several characteristics of the production technology, including technical efficiency, returns to scale, and elasticities of substitution. I then estimate the impact of these characteristics on the probability of converting from conventional to organic milk production between 2005 and 2010. Conventional dairies with lower technical efficiency, higher returns to scale, and those with the ability to easily substitute between key inputs have considerably higher likelihood of converting to organic production. This chapter suggests further consolidation in the conventional industry as the low-end firms exit for the organic industry. In the final chapter, I assess the welfare implications of imposing a revenue-neutral tax in the presence of the Renewable Fuel Standard (RFS). Simulations conducted using data from Washington and Oregon indicate that the imposition of a revenue-neutral tax raises welfare by 19% to 20% and increases the cellulosic biofuel sector marginally at a rate of 1% to 2%. Also, increases in the input ratio requirement for cellulosic biofuel from the RFS will have little impact on the optimal revenue-neutral tax rate and corresponding welfare. Changes to the cellulosic biofuel waiver price, which can be used to circumvent the input ratio requirement, reduces the optimal revenue-neutral tax because less pollution is emitted.