The impact of market clearing assumptions and dynamics on demand elasticities

Oczkowski, Edward

doi:10.1016/s0165-1765(98)00034-2

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Winegrape Price Equation Estimates and Discussion1

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2006

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“…This difference is illusory. As pointed out in Oczkowski (1998) disequilibrium models have more elaborate dynamic effects than equilibrium models. In Table 5 for the equilibrium models the estimated impacts are both short‐ and long‐run given the absence of lagged prices in the specification.…”

Section: Winegrape Price Equation Estimates and Discussionmentioning

confidence: 99%

Modeling winegrape prices in disequilibrium

Oczkowski

2006

Agricultural Economics

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This article presents an econometric model of winegrape prices which recognizes the existence of demand and supply imbalances in the Australian market. A "markets in disequilibrium" framework is employed to motivate modeling price changes as responding to variations in excess demand/supply. The disequilibrium price equation provides estimates of regional and varietal price discounts/premiums and a measure of the speed of disequilibrium price adjustment. The equilibrium assumption is rejected for the market and substantial differences between equilibrium and disequilibrium estimates point to the inaccuracies of assuming market clearing. Disequilibrium estimates point to significant differences between warm and cool regions and changing speed of disequilibrium adjustment over time. Copyright 2006 International Association of Agricultural Economics.

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Section: Winegrape Price Equation Estimates and Discussionmentioning

confidence: 99%