Frank Ackerman and Elizabeth A. Stanton
Optimistic views of climate impacts on agriculture, drawing on 1990s research, have helped to justify relatively complacent approaches to climate policy. Newer research has identified more ominous climate threats to agriculture—calling for a revised perspective on climate policy. This chapter reviews three categories of climate impacts on agriculture. First, carbon fertilization, although still seen as a benefit to most crops, is now estimated to be smaller than in earlier research. Second, the effect of temperature increases is now recognized to involve thresholds, beyond which yields per hectare will rapidly decline. Finally, changes in precipitation can be crucial—not only in cases of drought, but also in subtler shifts in timing and intensity of rainfall. Response to the climate crisis in agriculture will require adaptation, via the creation of heat-resistant and drought-resistant crops and cultivars, and reduction in greenhouse gas emissions as rapidly as possible, to limit future climate-related damages.
This article focuses on the analysis of consumer demand in markets for vertically differentiated products—markets where quality is the main differentiating attribute of the goods involved. The objective is to provide an overview of the analysis of consumer demand in vertically differentiated markets, the standard assumptions employed in the literature, and the relevance and ramifications of some key assumptions for the analysis of food product markets. The article presents a general model of vertical product differentiation and derives the consumer demands for, and market shares of, the different products, as well as measures of consumer surplus for the different consumer groups involved. The discussion then focuses on alternative model formulations derived through different assumptions employed in the analysis. The assumptions employed can have important ramifications for the equilibrium variety and the structure of different supply channels. Finally, this article discusses some important issues that can be addressed using this methodological framework.
Roland Herrmann and Ramona Teuber
This article summarizes and surveys the economics of geographically differentiated products. It presents the rationale for regulation and the economic implications of regulation on geographical indications (GI) are elaborated by the use of various theoretical approaches. The article defines the concepts of geographically differentiated products and geographical indications and outlines briefly the different legal regulations in force. Thereafter, the economic rationale for establishing and protecting GIs as well as the different paradigms prevailing in the European Union and the United States are presented. Moreover, this article analyzes economic impacts of protecting and promoting GIs. It reviews and synthesizes the available empirical evidence on consumers' willingness to pay (WTP) for origin labels and the economic rationale of GIs. The analyses comprises a large number of different approaches and case studies reflecting the array of research questions arising out of geographically differentiated products.
Klaus Keller and Robert Nicholas
This chapter describes and applies criteria for assessing the usefulness of climate projections to inform risk management decisions. In particular, we discuss climate projections in terms of whether they represent decision-relevant climate properties, time scales, and uncertainties. We focus on two decision problems outlined in the introduction: the design of climate change adaptation and mitigation strategies. We argue that although climate projections have seen drastic improvements in the last few years, they still show considerable limitations in the projection of decision-relevant metrics, are often silent on decision-relevant time scales, and neglect potentially crucial uncertainties. We close with a brief outline of potential research opportunities.
Pierre R. Mérel and Richard J. Sexton
Product differentiation is certainly one of the salient characteristics of today's food markets in developed economies. This article focuses on models of horizontal differentiation and on conceptual models. It presents a general framework to modeling markets with differentiated products and illustrates the limitations to this approach. It argues that a solution is to impose more structure on the model, for example by assuming either horizontal or vertical differentiation. This article presents a generalized version of Hotelling's original model and derives the short-run equilibrium and key comparative statics. It then considers further extensions and generalizations of the short-run model, and discusses applications of the model to food markets. It addresses the question of firms' optimal location in the product space and considers horizontal product differentiation based upon multiple product characteristics.