Markets and Information Economics

Areas of Research

Agricultural and Food Policy

Demand Analysis and Production Economics

Market Organization, Structure, and Contract Theory

International Trade

Macroeconomics of Agriculture and Finance

Time-Series Econometrics

Overview

Markets and Information Economics explores the extent to which markets and other institutions process and convey information. Many of the problems of markets and other institutions result from costly information, and many of their features are responses to costly information. So while information influences many economic decisions, it also complicates many standard economic theories. The Markets and Information Economics Group in the Department of Agricultural Economics is a recognized leader in food markets and information economics research, including specialty areas related to market and demand analysis, product valuation, use of directed acyclic graphs in economic analysis, commodity futures and options, information acquisition, price dispersion, industrial organization, and auctions. For more information on our program, please check back here as we expand our website. You can contact the Graduate Office at (979)845-5222 or by email. Information for prospective students is available here.

Research Areas

Agricultural and Food Policy This field covers analysis of the impacts of government policy proposals and/or implementation procedures on farmers, agribusinesses, taxpayers, and consumers. Particular emphasis is placed on farm-level analysis of the impacts of policy change, implications of increased risk, and the government’s role in reducing risk. In addition, research is conducted for government agencies, farm and agribusiness organizations, and agricultural leaders throughout Texas and the nation. Trade policy research emphasizes issues of comparative advantage with collaborative research relationships in Germany, Mexico, Canada, and the Caribbean. Special expertise and an extensive track record of accomplishments exist in the following areas: crop program analysis, farm-level and regional impacts, macroeconomic policy impacts, livestock and dairy policy, environmental/resource policy, and development policy. Impact of Public Policy on Consumers - Oral Capps, Jr. Public Policy and Simulation Analysis - James W. Richardson and Joe Outlaw International Trade and Public Policy - Gary W. Williams and David A. Bessler	[ Back to top]
Demand Analysis and Production Economics This field places emphasis on empirical analysis of single-equation and multi-equation demand relationships. Research topics include estimation of demand systems, particularly the linear expenditure system, the Almost Ideal Demand System, and the Rotterdam model, and calculation and interpretation of elasticities; household production economics, both theory and empirical applications; the theory and application of consumer goods characteristics models; and the estimation of demand models with advertising and health information. Linkages with the retail and farm-level sectors also are explored via the use of elasticities of price transmission. The area of production economics and farm and ranch management is a traditional strength of our Department, which recently ranked in the top three nationally in production economics. The scope of the faculty’s current research in the area is broad, focusing on both firm-level and aggregate analyses, with ongoing research relating to financial management, resource allocation, and environmental and policy issues. Strong interdisciplinary and extension linkages support this research agenda. Quantitative techniques including econometrics, mathematical programming, dynamic optimization, and simulation are extensively utilized in conducting this research. Demand Analysis - Oral Capps, Jr., George C. Davis Agricultural Production -	[Back to top]
Market Organization, Structure, and Contract Theory This field covers basic and advanced elements of industrial organization theory, as well as empirical applications to agricultural and natural resource markets. Students can undertake studies in many areas including: structure and organization of agricultural and natural resource markets; economic implications of horizontal and vertical integration and contracting on markets; the implications of advertising, product differentiation, and flexible manufacturing in food and fiber markets; and the influence of market structure and government regulation on producers, the food and fiber industries and consumers. Major emphasis is on integrating the theory of industrial organization with quantitative methods to uncover underlying market structures and quantifying market effects of alternative market strategies. Market Structure - Oral Capps, Jr., Rodolfo M. Nayga Industrial Organization - H. Alan Love Contract Theory - H. Alan Love	[Back to top]
International Trade This field explores basic elements of international trade theory including classical trade theory and the new theory of imperfect competition in international markets. Areas of study include: trade theory and the effects of protection within the context of competitive markets; empirical models of international trade; the effects of imperfect competition on international trade and trade policy; trade policy; the effects of direct foreign investment on national welfare and product flows; and the political economy of protective policies and reducing protection. International Trade - Gary W. Williams, C. Parr Rosson, III, and David A. Bessler	[Back to top]
Macroeconomics of Agriculture and Finance Macroeconomics of Agriculture analyzes the food and fiber industry at the aggregate level. Students involved in these research topics will acquire knowledge about the process of macroeconomic analysis and what this means for specific segments of the nation’s farmers and ranchers, input supply firms, food processors and fiber manufacturers, and other related sectors in the U.S. Students wishing to pursue finance as an area can combine PhD courses taught in the Finance Department with readings courses in the Department of Agricultural Economics, covering such topics as farm financial management, agricultural lending institutions, and macroeconomics of agriculture. Topics covered in farm financial management include business and financial risk management strategies and application of related decision tools. Topics covered in agricultural lending institutions include credit and portfolio analysis and institutional strategies for coping with credit, collateral, liquidity, and interest rate risk. Topics covered in macroeconomics of agriculture include alternative approaches to modeling aggregate activity and the sensitivity of the entire food and fiber industry to changes in macroeconomic policy. Our Department’s faculty includes professors specializing in each of these three areas. Macroeconomics of Agriculture and Agricultural Finance - John B. Penson Applied Macroecononomics and Finance - David A. Bessler Agricultural and Applied Finance - David J. Leatham	[Back to top]
Time-Series Econometrics Many of the data sets we study in Agricultural Economics are observed over time, where the order of observation is an integral part of the analysis. So, for instance, data on prices in efficient markets are such that prices observed in close time proximity to one another are closer to each other than are prices observed at long time intervals. Data from such markets will show no particular devotion to their historical mean. Many standard (non-time series) statistical and econometric methods rely on an informative mean for their desirable properties. Failure to correctly account for the time series properties of one’s data may result in the fitting of spurious relations between or among economic data sets. AGEC 661 gives partial treatment to this literature; in addition, AGEC 622 offers lectures on the methods. Courses from the Departments of Statistics and Econometrics supplement our courses. Time Series Econometrics, Structural VARs and VECMs - David A. Bessler	[Back to top]