This study is directed toward an investigation of
the longer term aggregate consequences that arise from
producer behavior in a production environment
characterized by risk and uncertainty. In particular,
the papers included herein examine circumstances under
which individual actions may result in adverse long term
consequences in the aggregate market, even though they
are based on rational decision-making from the producer's
point of view. The research is conducted in two
distinct components, resulting in the presentation of two
separate manuscripts.
In the first paper a single product market model is
developed with producer actions characterized by risk averse behavior. Individuals are assumed to maximize the expected utility of profits according to a mean-variance
specification. Using an analytical framework, it is
determined that risk averse actions can increase
aggregate risk levels once market adjustment is
completed. Aggregate market risk is measured by the
change in the expected value and variance of consumers'
and producers' surplus. Market effects are found to
depend on the relative elasticity of demand and the price
expectation formulated by the producer.
The second paper explores the issue of declining
soil productivity from a social perspective. Using a
simulation model developed for a generalized agricultural
market, the potential long term impacts of erosion on
crop prices and on resulting measures of social welfare
are examined. It is found that in the aggregate
producers with erosive land are generally better of
without erosion control than with erosion control, at
least for the first few generations. In the long run
however, these producers are significantly worse off as
the effects of erosion outweigh any technology
improvements. / Graduation date: 1987
| Identifer | oai:union.ndltd.org:ORGSU/oai:ir.library.oregonstate.edu:1957/26753 |
| Date | 23 May 1986 |
| Creators | Wear, Linda Marie |
| Source Sets | Oregon State University |
| Language | en_US |
| Detected Language | English |
| Type | Thesis/Dissertation |
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