Using a newly defined notion of aversion to income risk, the behavior of the marketed-surplus producer under price risk is characterized. Unlike the familiar case first examined by Sandmo, output depends on both ordinal preferences for goods and on risk attitudes. Conditions are found that yield an output level under risk that is smaller than under certainty. If these conditions do not hold, both risk and risk-aversion may have a positive effect' on output. Implications for econometric studies of risk attitudes are considered and illustrated with an example. Finally, we examine the effect of uncertainty on the peasant's long-run equilibrium-.1 Key words: marketed surplus, production under multivariate risk, peasant households. Marketed Surplus Under Risk: Do Peasants Agree with Sandmo? Agricultural economists have devoted considerable effort to studying production decisions by farmers in developing countries. Essential to this effort is a thorough understanding of the role of risk in peasants' production decisions. Important insights into this role of risk are provided by the literature on firms' behavior under risk. Perhaps the most influential paper in this area is by Sandmo, who established that a risk-averse firm facing output-price risk produces less output than a risk-neutral firm. Sandmo and the numerous studies that followed made use of the expected utility hypothesis, combined with an assumption that utility depends on only one random variable-the level of final wealth. Other risks affecting utility must be presumed absent or to have no effect on the behavior under study. An important characteristic of the agricultural peasant household is the consumption of a portion of its own farm product (e.g. Haessel; Renkow; Toquero, Duff, Anden-Lacsina, and Hayami). Unlike the familiar case studied by Sandmo, when subject to output price risk, such a "marketed-surplus" household faces multivariate risk because the price of one of its consumption goods is also random.1 Thus, the profits risk affecting wealth cannot be modeled in isolation from other risks. As a consequence, a risk-averse household may no longer choose to produce below the profit-maximizing level of output when the price is random. The literature (e.g. Roe and Graham-Tomasi) has emphasized that maximization of utility defined on wealth alone is not adequate to describe choices under risk in agricultural households. Anderson, Dillon and Hardaker (p. 76) asserted that "money is not everything; and the consequences of many decision problems are.. ..not well represented in terms of only a single attribute such as monetary gain or loss". Wolf (p. 2) observed that "peasants run a household, not a business concern." Similarly, Ellis (p. 102) proposed that "the interaction of consumption and production within the household causes a unique form of decision making which sets peasants apart from any other kind of production unit...". Restrictions can be found that imply separability between production and consumption decisions. However, Fabella, Pope, and Fink...

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This article applies a discrete-choice equilibrium model with product differentiation to study the rural tourism industry in Israel and to jointly estimate the effect of lodging and farm characteristics on consumer preferences and firms' costs. The model accounts for heterogeneity in tastes and technologies and allows for unobservable product characteristics. We find evidence for technological synergy in the joint production of agricultural goods and rural tourism services, but none in the demand. The differentiation in the industry is the major contributor to the price-cost margin, which averages 62%. An additional minor cause is government regulations, which restrict supply. Simulation results demonstrate the growth potential of the industry and show that the government can play an important role in catalyzing growth via investment subsidization, deregulation of supply and information distribution. Copyright 2008, Oxford University Press.

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may AbstractWe consider the consequences of a shared brand name such as geographical names used to identify high quality products, for the incentives of otherwise autonomous firms to invest in quality. We contend that such collective brand labels improve communication between sellers and consumers, when the scale of production is too small for individual firms to establish reputations on a stand alone basis. This has two opposing effects on member firms' incentives to invest in quality. On the one hand, it increases investment incentives by increasing the visibility and transparency of individual member firms, which increases the return from investment in quality. On the other hand, it creates an incentive to free ride on the group's reputation, which can lead to less investment in quality. We identify parmater values under which collective branding delivers higher quality than is achievable by stand alone firms.