Agricultural & Resource Economics Theses and Dissertations
Permanent URI for this collectionhttp://hdl.handle.net/1903/2739
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Item Market Structure and Congestion Externalities: Theory and application to the ride-hailing industry(2021) Gomez Gelvez, Julian Andres; Williams III, Roberton C; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The encompassing theme of this dissertation is the analysis of markets that feature market power and negative externalities. I focus mainly on congestion externalities, as externalities that affect only market participants. The first chapter evaluates the efficiency of private pricing of congestible resources. I develop a model of congestible resource use that explicitly considers a bivariate distribution of reservation values and sensitivities to congestion across potential users. This model highlights the importance of the correlation between reservation values and sensitivities to congestion to judge the efficiency of private pricing. Numerical results based on a road pricing example show that monopolistic pricing can range from very inefficient (price too high) when the correlation is negative to almost complete efficiency when it is strong and positive. The second chapter studies ride-hailing markets mediated by digital platforms like Uber. I extend the model of the first chapter to include a supply side of drivers. A monopolistic platform chooses prices on both sides of the market to maximize profit. I calibrate the model to the morning peak period of Bogota, Colombia. The results show that the price gap imposed by a monopolistic platform corresponds to about two thirds of the net marginal external cost caused by an additional ride hailer. A congestion charge on ride hailing is then justified. However, the optimal congestioncharge, as a tax on the price charged to riders, covers only 50% of the marginal external cost. The last chapter explores the effects of modifying several assumptions of the ride-hailing model developed in the second chapter. The main modification is to move from a monopolistic market structure to a duopoly. I show that absent any differentiation between platforms, competition leads to zero profits. This result supports the idea that ride-hailing markets gravitate towards a single platform. Assuming a small amount of differentiation, the duopoly equilibrium reduces the price charged to riders and increases the size of the market. This expansion reduces overall welfare due to the external effect on traffic congestion and calls for a higher congestion charge.Item Environmental Federalism: Chinese Governmental Behaviors in Pollution Regulations(2019) Yan, Youpei; Lichtenberg, Erik; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)China's economic growth has come with the cost of environmental deterioration. The economy has faced with many problems in land resource depletion and industrial pollution. I examine two policies that tackle three major environmental aspects on land, water, and air in China. All three chapters share the theme that devolution without enough oversights in environmental policies has lead to unintended consequences in practice, as local officials have their trade-offs to promote local economy and protect environment. The first chapter explores the local government's behavior in a land conservation program, which intends to reduce soil erosion by subsidizing afforestation of low productive farmland on steep slopes. Theoretically, the incentives created by the program combined with insufficient oversight have led to afforestation of highly productive farmland on level ground. With a unique land transition dataset, I show that this unintended land use effect has been substantial. This unexpected displacement of highly productive farmland represents a form of leakage that has not been fully explored in the literature. And it is problematic to a country with limited arable land relative to population size as it can negatively impact national food production targets and self-sufficiency goals. The second chapter investigates water pollution activities under China's Pollution Reduction Mandates. In response to the substantial environmental deterioration, the central government taxes firm emissions and subsidizes abatement technology installation. In theory, devolution to local governments to lower pollution and promote economic growth can create local incentives to allocate subsidies to effectively export pollution. I provide the first evidence of the magnitude of these distortions with unique firm-level pollution panel data and find evidence of water pollution exported to downstream and further away from local residences. A simulation indicates that the distortions created by local jurisdictional control harm the environment substantially: centralized allocation of subsidies could reduce total emissions by 20-30%. The third chapter keeps investigating the inter-jurisdictional pollution externalities on air pollution under the same mandates. It provides a complimentary evidence to show that local governments have incentives to promote spatial spillovers and free-ride on the downwind neighbors.Item Agriculture, Environmental Incentive Payments, and Water Quality in the Chesapeake Bay(2016) Fleming, Patrick; Lichtenberg, Erik; Newburn, David; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)Nonpoint sources (NPS) pollution from agriculture is the leading source of water quality impairment in U.S. rivers and streams, and a major contributor to lakes, wetlands, estuaries and coastal waters (U.S. EPA 2016). Using data from a survey of farmers in Maryland, this dissertation examines the effects of a cost sharing policy designed to encourage adoption of conservation practices that reduce NPS pollution in the Chesapeake Bay watershed. This watershed is the site of the largest Total Maximum Daily Load (TMDL) implemented to date, making it an important setting in the U.S. for water quality policy. I study two main questions related to the reduction of NPS pollution from agriculture. First, I examine the issue of additionality of cost sharing payments by estimating the direct effect of cover crop cost sharing on the acres of cover crops, and the indirect effect of cover crop cost sharing on the acres of two other practices: conservation tillage and contour/strip cropping. A two-stage simultaneous equation approach is used to correct for voluntary self-selection into cost sharing programs and account for substitution effects among conservation practices. Quasi-random Halton sequences are employed to solve the system of equations for conservation practice acreage and to minimize the computational burden involved. By considering patterns of agronomic complementarity or substitution among conservation practices (Blum et al., 1997; USDA SARE, 2012), this analysis estimates water quality impacts of the crowding-in or crowding-out of private investment in conservation due to public incentive payments. Second, I connect the econometric behavioral results with model parameters from the EPA’s Chesapeake Bay Program to conduct a policy simulation on water quality effects. I expand the econometric model to also consider the potential loss of vegetative cover due to cropland incentive payments, or slippage (Lichtenberg and Smith-Ramirez, 2011). Econometric results are linked with the Chesapeake Bay Program watershed model to estimate the change in abatement levels and costs for nitrogen, phosphorus and sediment under various behavioral scenarios. Finally, I use inverse sampling weights to derive statewide abatement quantities and costs for each of these pollutants, comparing these with TMDL targets for agriculture in Maryland.Item Essays on Government Spending and Sustainable Growth(2012) Islam, Asif Mohammed; López, Ramón; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)The first chapter examines the effect of the composition of federal and state government spending on SO2 air concentrations in the US. The results indicate that a reallocation of spending from RME to PME at the state and local level reduces sulfur dioxide concentrations while the composition of federal spending has no effect. A 10% percent increase in the share of PME spending reduces sulfur dioxide concentrations by the range of 3 to 5% for state and local spending. This is a significant effect since sulfur dioxide concentrations have been falling at an annual average rate of 5% from 1980 to 2008. The results are robust to various sensitivity checks. The second chapter documents the creation of a US government spending allocation database that provides new data on a set of disaggregated government spending categories covering all the states in the US for the period 1983-2008. The data allows for the comparison of federal versus state and local government spending over time on various spending items. This is achieved by categorizing and aggregating expenditures for over 1,500 federal programs and combining data on state and local government spending. The key challenge in separating federal and state and local government spending is the issue of double counting since part of state and local spending is from the federal government. The dataset presented will aid researchers in separately accounting for both state and local, as well as federal spending in future research. Finally, the third chapter examines fiscal spending and economic growth in the presence of imperfect markets. Political economy factors tend to induce many governments to spend on private goods (RME) to the detriment of spending on social and public goods (PME). This bias in spending patterns is particularly costly for economic growth when capital markets are imperfect. A theoretical model on government spending and growth is developed and linked quite closely to an empirical model. The empirical results fully corroborate the hypothesis that spending biases in favor of non-social subsidies (RME) reduce the rate of economic over the long run. The empirical findings are exceptionally robust.Item An analysis of regulatory decisions on food-use pesticides under the Food Quality and Protection Act(2012) Newcomb, Elisabeth Jo; Cropper, Maureen L; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)To ensure the safety of older pesticides used in the United States, the EPA required the reregistration of pesticide uses which were first introduced before 1984. Using a dataset of reregistration outcomes for 2722 pesticide uses applied to food crops, I analyze the extent to which these decisions were determined by chronic health risks, pesticide expenditures, and other factors. I find that the dietary health risks associated with pesticides are had greater influence on actions to reduce dietary and occupational exposures than on pesticide cancellations. High population dietary risks are associated with higher rates of pesticide cancellations, though these results are insignificant. There is evidence that the EPA was more responsive to child and infant dietary risks: values above the EPA's threshold of concern were more than 10% more likely to be cancelled than those that were not (significant at the 10% level). The effects of cancer risks on EPA actions are more ambiguous, though this may be due to data limitations. The less safe pesticides are for handlers, the more often they are cancelled, but pesticide safety has a more significant correlation with reentry intervals. A one percent decrease in the safety of a pesticide to handlers predicts a reduction in reentry interval of 1.6 days (significant at the 5% level). Expenditures on individual pesticides have a strong relationship with pesticide reregistration, with an additional half million dollars in expenditures predicting a 2% increase in the probability of reregistration (significant at the 1% level). Expenditures are not so correlated with reentry intervals or changes in pesticide tolerances. After accounting for dietary risk and pesticide expenditures, Monsanto and Dow were most likely to have uses reregistered. Though there was some concern that small crops with low pesticide expenditures would suffer extra cancellations, small crop uses were no more likely to be cancelled than large crop uses. Mentions of individual pesticides in the media had no apparent relationship with the outcome of reregistration decisions.Item A balancing act? An empirical examination of whether the dynamic balance policy has helped China reduce cultivated land loss amid rapid urban land expansion(2011) Feng, Juan; Lichtenberg, Erik; Ding, Chengri; Agricultural and Resource Economics; Digital Repository at the University of Maryland; University of Maryland (College Park, Md.)For decades, the Chinese government has been concerned about its ability to meet the grain self-sufficiency goal due to the depletion of cultivated land caused by urbanization and industrialization. The Dynamic Balance Policy (DBP) was initiated in 1998 to balance China's need to protect cultivated land with the need to provide land for urban and industrial development. The DBP is a "no net loss" policy which requires local government to keep their good-quality cultivated land at the current level. If cultivated land is converted to other uses, an equal amount of other land, adjusted for the quality, must be converted to cultivation to compensate for the loss. Empirical evidence suggests that the DBP has had no effects of reducing cultivated land loss in China. Economic incentives, such as the values of urban and cultivated land, emerge as the most influential factors for China's land use changes. Moreover, these economic incentives may have overridden the effects of the DBP, if any. Polices can be made more effective to address the windfall profits in land acquisition and conveyance, and offer economic incentives for not converting cultivated land to urban uses. This dissertation conducts a systematic examination of the effects of the DBP of curbing the rate of cultivated land conversion. In particular, it develops a theoretical model of land conversion that combines the institutional structure of land use in China and the incentive structure of Chinese local officials whose goal is to promote local economies and budgetary balances. This model serves as the theoretical foundation for the empirical examination. The empirical implementation of the land conversion model uses the official land use data provided by the Ministry of Land and Resources of China and economic data published in various issues of provincial statistical yearbooks. This is a unique set of data which combines China's official land use data and economic data at the prefecture level and covers a period of rapid economic growth and prominent changes in land uses from 1996 to 2004.