Scholarship & Research
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Item The effects of spotted owl litigation on national lumber markets(Montana State University - Bozeman, College of Agriculture, 1994) Yoder, Jonathan Keith; Chairperson, Graduate Committee: Randal R. Rucker.Spotted Owl litigation has led to substantial fluctuations in Pacific Northwest public timber availability from 1987 to the present. A theoretical and two distinct empirical models using monthly data are developed to understand and test the potential of this litigation to affect the national market for lumber. The results of an econometric framework indicate that Northwest public timber fluctuations have affected the Northwest lumber industry, but provide no evidence that the effects are felt in other regions of the United States. A time-series approach indicates that the Northwest lumber market is affected by these timber fluctuations, and that regional lumber markets are interdependent, but again, there is no direct evidence that Northwest public timber fluctuations have affected the lumber markets of other regions. Using each of these empirical frameworks, intervention analysis is performed to test the significance of individual litigation events on regional lumber markets. Econometric-model intervention results provide no evidence to suggest that individual litigation events have influenced these markets, but time-series intervention results suggest that lumber prices may have been influenced by some of the litigation in question.Item Ticket pricing in the alpine ski industry.(Montana State University - Bozeman, College of Agriculture, 1990) Gerlach, Andrew Robert; Chairperson, Graduate Committee: Ronald N. Johnson.Alpine ski areas worldwide use daily lift-ticket pricing rather than individual ride-ticket pricing. Robert Barra and Paul Romer argue that the ski ride industry is a competitive market and that identical equilibriums and revenues are reached with either pricing method. They also argue that sticky lift ticket prices and lift-line queues are efficient. Lift-ticket pricing dominates because of lower monitoring costs. Tests of their model's predictions, however, do not support their model. A monopolistic ski-lift pricing model is developed. The monopoly model predicts that lift-ticket pricing would dominate the market due to its revenue generating advantages over ride-ticket pricing. Overall the monopoly model predicts the pricing policies that exist in the ski ride market better than the competitive model of Barra and Romer. It is argued that lift-ticket pricing is an indication of the market power most ski areas possess.Item The changing structure of the determinants of cattle prices in the United States : an empirical study(Montana State University - Bozeman, College of Agriculture, 2009) Arthun, Cole Derril; Chairperson, Graduate Committee: Vincent H. Smith.This study utilizes a new quarterly data set for the United States cattle markets spanning from 1971-2008 to estimate dynamic price models in three vertically related cattle markets: the models for boxed beef cutouts, slaughter cattle, and feeder cattle. Structural tests are then utilized to test whether the occurrence of Bovine Spongiform Encephalopathy (BSE) in 2003 and the introduction and widespread use of the Atkins diet between 1991 and 2005 lead to structural changes in the determinants of prices in each of the three markets. The results suggest BSE did not cause structural change within any market level, and BSE and Atkins diet events caused structural change within the boxed beef cutout values level. An important contribution of this study is the examination of structural change, suggesting that the market events lead to little or no structural change within the market levels.Item Bank risk classification and optimal regulatory choice(Montana State University - Bozeman, College of Agriculture, 1991) Wang, Xiujun; Chairperson, Graduate Committee: Ann L. Adair.A theory of bank regulation is formed in this study by choosing an optimal classification scheme so as to minimize specific costs with assumed fixed regulatory instruments and relative costs. The likelihood of failure of a financial institution can be estimated using the financial data of that institution. Previous research studies have attempted to predict the probability of failure by using one year of data or lagged data. In these studies, a bank on a failure trajectory was counted as a nonfailure until it actually failed. The estimation was biased in favor of nonfailures, meaning that a failing bank was more likely to be classified as a survivor. This study develops a multinomial ordered logit model which uses several years of data to classify banks into a larger number of categories. Instead of just predicting banks that will fail in the following year, it can predict the probability of failure within multiple time periods. The major empirical results of this study state that the probability of failure of financial institutions can be estimated using a multinomial ordered logit model. Financial ratios based on capital, assets, total loans, nonaccruing loans, loans 90 days past due and net income were found to be significant variables in predicting failure probabilities. The results present evidence that banks can be classified into high or low risk categories which could be used by regulators to minimize the costs of regulation and bank failure. Better predictive ability would allow regulators to take action sooner to assist banks in maintaining solvency and reduce the number of failures and their associated costs.Item An optimal replacement policy for beef cows : a state model under conditions of uncertainty(Montana State University - Bozeman, College of Agriculture, 1994) Graham, Patrick M.; Chairperson, Graduate Committee: M. Steve Stauber.Cattle ranchers are periodically faced with the decision of whether or not to cull/replace a brood cow. Assets such as beef cows are subject to stochastic elements that affect the cull/replacement decision. Stochastic elements include events such as death, infertility, and the inability to meet specific performance standards. Observations suggest that many Montana ranchers use a period-by-period cull/replacement decision-making strategy. However, varying management practices, stochastic elements, and the lengthy biological process associated with cattle production limit the validity of a single long-run replacement policy applied across all cattle ranches. This thesis examines a long-run optimal replacement policy based on economic criterion that individual cattle ranchers can adapt to their specific operation. Burt's discrete time model for optimal replacement under stochastic conditions is used as the analytical model. Published data measuring the likelihood of stochastic events, Billings, Montana cattle prices, and the long-run average variable costs from a case study of an individual ranch in Eastern Montana are used in the empirical model. Prices and costs are varied to reflect varying cattle prices over time and the heterogeneous nature of management practices with respect to costs. The results indicate that, although a single optimal planned replacement age is not derived, voluntary replacement should occur between cow ages of six and eleven years. These results are insensitive to varying price/cost combinations used in the study. Given the insensitivity of the results to the varying price/cost levels it is likely that the probabilities measuring the stochastic events are the main determinants in deriving an optimal replacement age. The results also show that cattle ranching is profitable except in high cost with average to below average model price conditions.Item Optimal decision alternatives for acquiring bred beef heifers by Montana producers(Montana State University - Bozeman, College of Agriculture, 1991) Marsh, Thomas Lloyd; Chairperson, Graduate Committee: R. Clyde Greer.Montana cattlemen traditionally replace beef cows culled from the breeding herd with bred heifers produced from within their ranching operations. The purpose of this study is to compare alternative methods commercial cow-calf operators could utilize to acquire bred beef heifers. It is hypothesized that Montana ranchers could decrease the expected present cost of obtaining bred heifers by choosing acquisition alternatives appropriate to the current and lagged state of the cattle and feed market. A behavioral price model for Montana bred beef heifers is theoretically developed and estimated. Time series equations that predict bred heifer price and feeder heifer price are estimated. Montana barley and alfalfa price series are combined in a weighted sum to form a price series used to construct a time series equation that will predict feed ration price per day for beef heifers. These time series equations are combined to form a system of three equations that jointly predict bred heifer, feeder heifer, and feed ration price. Dynamic programming is utilized to compare the expected present cost and determine an optimal decision rule among twelve distinct strategies for acquiring bred beef heifers. Stochastic state variables are current feeder heifer price, lagged feeder heifer price, and current feed ration price. Transition probabilities for the stochastic variables are calculated from the system of three time series equations. Expected immediate costs for producing bred heifers include feeding, breeding, pregnancy testing and marketing costs. The conclusion drawn from the dynamic programming model results is Montana ranchers can decrease the expected present cost of acquiring bred heifers. When feeder heifer price is decreasing the decision to sell heifer calves immediately after weaning and purchase bred heifers prior to calving is optimal. If feeder heifer price is relatively unchanged or slightly increasing retaining heifers over the winter, selling them in the spring, and purchasing bred heifers is the optimal decision policy. Raising bred heifers is optimal only when feeder heifer price is sharply increasing.Item The objective of nonprofit environmental groups : are they maximizing services or their budgets?(Montana State University - Bozeman, College of Agriculture, 1994) Brown, Daniel K.; Chairperson, Graduate Committee: Terry Anderson.The purpose of this thesis was to determine the objective of prominent nonprofit environmental groups. Two possible objectives have received considerable attention in the nonprofit literature: service maximization and budget maximization. Accordingly, this study examines whether environmental organizations attempt to maximize the services they provide or maximize the budgets they control? A linear model using procedures to handle pooled data was used in the estimation. The results imply that the environmental groups tested tend to maximize their own budget rather than the services they provide, but the results are not entirely conclusive. There is some evidence that these organizations have mixed motivation. Future studies would be aided by additional data, including both more years and organizations.Item An economic comparison of breeding performance of yearling and two-year-old bulls(Montana State University - Bozeman, College of Agriculture, 1990) Carroll, Llane Glenn; Chairperson, Graduate Committee: R. Clyde Greer.An important decision a rancher makes is the age at which a bull will first be used for breeding. While yearling bulls are used by many ranchers in the Great Plains States, there is concern that lack of maturity among yearling bulls leads to lower breeding performance. To compare the breeding performance of yearling and two-year-old bulls Line One Hereford bulls in single sire breeding herds at Fort Keogh Livestock and Range Research Laboratory (LARRL) were analyzed. Tests for differences in pregnancy rates, calving dates, calf birth weight, and calf average daily gain were conducted. The physical attribute distributions were converted to a returns distribution for each age of bull. The distributions were then compared in a stochastic dominance framework. From the results it was concluded that the alternative "use the bull first as a two-year-old" dominated the alternative "use the bull first as a yearling" in the first order stochastic sense. While ranchers are using yearling bulls, the expected income is higher and the dispersion of observed income smaller from herds bred to two-year-old bulls. Ranchers may be deriving other benefits from the use of yearling bulls such as decreased intervals for introducing special genetic traits. Ranchers may be using yearlings in multiple sire settings which may diminish the downside risk of using yearling bulls as compared to using yearling bulls in single sire settings.Item The effects of domestic and trade policy variables on the U.S. beef wholesale and slaughter markets(Montana State University - Bozeman, College of Agriculture, 1990) Jeong, Kyeong-Soo; Chairperson, Graduate Committee: John M. Marsh.Trading in beef products has been increasing during the 1980's and its impact on the U.S. beef industry has become an important issue for various interest groups. Particularly, U.S. by-product exports have become a large value item in U.S. beef product exports and contribute greatly to meat packer returns and Japanese beef import quotas have become less stringent. The main objective of this study is to develop a dynamic structural model of the U.S. wholesale carcass and slaughter cattle industry. The model incorporated pertinent domestic variables and foreign trade variables such as imports and exports of beef and veal, live cattle imports, and by-product exports. The econometric model explicitly includes U.S. carcass demand and supply, U.S. slaughter demand and supply, beef and veal import demand and supply, beef and veal export demand and supply, live cattle import demand and supply, and foreign trade in farm level by-products. The empirical model was estimated within a rational distributed lag framework, using instrumental variables with either the maximum likelihood or ordinary least squares procedure depending upon the nature of the stochastic error terms. The short-run and long-run impacts of the exogenous variables on the dependent variables are calculated using sequential partial derivatives involving the difference equation coefficients and slope parameters. The distributed lag impacts of trade shocks on the U.S. beef prices are calculated using reduced form coefficients specific to selected exogenous and predetermined variables combined with price transmission effects between market levels. The empirical results show that most of the foreign trade variables were statistically significant and demonstrated theoretically correct signs. The long-run impacts of foreign trade in beef products were generally small but were large enough to suggest that incorporating foreign market arguments in the framework of dynamic analysis is important in a U.S. beef market analysis. However, the use of monthly or quarterly data and disaggregate price and quantity data for the trade variables would be more desirable in order to reduce aggregation bias.Item Minimum-data analysis of ecosystem service supply with risk averse decision makers(Montana State University - Bozeman, College of Letters & Science, 2009) Smart, Francis Clayton; Chairperson, Graduate Committee: John Antle.There is a need for models that produce results that are both timely and sufficiently accurate to be useful to policy makers. The minimum-data approach of Antle and Valdivia (2006) responds to this need by supplying a spatially explicit first order approximation that models ecosystem supply by producers. However, producers in developing nations often are observed to deviate from simple expected profit maximization. Risk is one possible explanation for this divergence. This study builds upon the minimum-data approach by allowing for risk averse producer preferences. The study presents a framework for translating relative risk aversion measurements into the parameters needed for the mean-standard deviation utility function. This study utilizes experimental and econometric measurements of risk aversion by other researchers to parameterize the model. Historic weather data are used with crop yield models to simulate temporal variation in crop yields. The model is used to simulate the supply of carbon sequestration in Machakos, Kenya. At low levels of risk, producers behave in a manner consistent with risk neutrality. However as risks and risk aversion levels increase, there is an increasing divergence from the behavior implied by expected profit maximization. The effects of varying the structure of risk preferences were also examined. This study finds that, consistent with the results in a number of other studies, the level of risk aversion is generally a more important factor in simulated behavior than the structure of risk preferences. This study also examines the effects of increasing the spatial variation of returns. As the spatial variation of returns increases, the predicted producer behavior converges on a fifty percent rate of adoption of the carbon sequestering system, regardless of other parameters. Overall, this study finds that - at levels of risk aversion measured in similar populations in developing nations - the inclusion of risk aversion in the model provides an explanation for why the observed behavior of producers appears to diverge from expected profit maximization.