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This article reviews literature on competitiveness of agricultural product and input markets. Although researchers in the United States and Europe emphasize different stages of the agricultural and food marketing system, their focus is similar: extent of buyer power, although both have largely ignored the sector supplying inputs to agriculture. The key conclusion is that there is little robust empirical evidence for food processing firms exerting buyer power, and there are limited data concerning vertical contracts between food processing and agriculture, but there is a small body of evidence concerning food retailer behavior and vertical coordination between food retailing and processing.

Using data on field trial applications, we estimate the lower bounds to concentration in research and development (R&D) activity for genetically modified (GM) cotton and soybean seed markets in the U.S. We find that both crop types exhibit endogenous costs of entry, which implies that firms respond to increases in market size with escalations of R&D investment, so as to improve product quality rather than permit additional firm entry. The implications of these results are that as markets for GM crop varieties become large, market concentration ratios will remain bounded away from perfectly competitive levels. In subsequent analyses, we adjust the measures of R&D concentration according to merger and acquisition (M&A) activity. We find that accounting for M&A activity increases the fitted lower bound to R&D concentration in both GM cotton and soybean seed markets by increasing the observed levels of concentration in small- and medium-sized submarkets for both crops.

Credence goods markets are subject to failure because consumers are unable to punish fraudulent experts who diagnose and supply treatment, and they lack the technical expertise with which to verify the quality of treatment actually offered. The focus of research in agricultural economics has been almost entirely on how labeling and certification of food products that contain credence attributes resolve the lemons problem. This ignores the crucial role that firms, nongovernmental organizations, or government regulatory agencies, acting either independently or jointly as experts, play in the process of diagnosis and treatment in credence goods markets. This is important if experts fail to act in good faith through their diagnosis and treatment.

Using a sample of bilateral trade flows across ten developed countries between 1974 and 1995, this article explores the effect of exchange rate uncertainty on the growth of agricultural trade as compared to other sectors. Based on a gravity model that controls for other factors likely to determine bilateral trade, the results show that real exchange rate uncertainty has had a significant negative effect on agricultural trade over this period. Moreover, the negative impact of uncertainty on agricultural trade has been more significant compared to other sectors.

In this article, two key questions are asked: why has the General Agreement on Tariffs and Trade (GATT) and its predecessor the World Trade Organization (WTO) worked in terms of multilateral tariff reduction and promotion of global trade, and to what extent will it act as a constraint on economic nationalism? To answer these two questions, three themes are laid out in the article: first, the seminal economic model rationalizing the economic logic of the GATT/WTO is assessed; second, the perceived relevance of the GATT/WTO in a world of increasing regionalism is discussed; and third, the robustness of the GATT/WTO legal framework and dispute resolution mechanism is evaluated. The key conclusion is that the underlying economic logic of the GATT/WTO is still relevant, but that enforcement of the cooperative agreement will likely be placed under significant strain with the threat of increased protection, and even a potential trade war.

We examine the role of fixed costs in research and development (R&D) in the market for genetically modified (GM) corn seed. In a mixed model of horizontal differentiation by genetic traits and vertical differentiation by productivity, we derive the empirically testable lower bounds to R & D concentration when R&D investments and market entry are jointly determined. When R&D investments translate into higher product quality, industries are said to be characterized by endogenous fixed costs such that the lower bound to R&D concentration increases with market size, but is less than the lower bound to market concentration based on sales. Using data on field trial applications of GM corn seed, we estimate the lower bound to R&D concentration, and find evidence of endogenous fixed costs with R&D concentration that is significantly greater than perfectly competitive levels. These endogenous fixed costs imply that concentration in the agricultural biotechnology industry is occurring due to the nature of R&D investment in product quality and not through anticompetitive practices. Adjusting for past merger and acquisition activity significantly raises the lower bound for infinitely-sized markets, but has no impact upon current market sizes, implying the industry may still undergo additional consolidation.

Objetivo: discutir la importancia y efectividad de las normas privadas para la industria alimentaria. Las normas alimen tarias privadas son importantes, dado que son establecidas por organismos privados, adoptadas e implementadas por empresas privadas, y su aplicación está a cargo de terceros. Esto lleva a una pregunta clave: ¿existen mecanismos eficientes que garanticen el cumplimiento y la aplicación de las normas privadas? Metodología: análisis de la aplicación de la ley a la certi ficación de normas alimentarias privadas, centrándose en la disuasión del incumplimiento y los incentivos para autorreportar. Resultados: el autorreportar reduce los costos de aplica ción, fomenta la remediación si no se cumplen las normas y reduce el costoso esfuerzo asociado con la evasión de la auditoría. Limitaciones: la certificación privada está bien documenta da, pero falta un análisis empírico del cumplimiento. Originalidad: extensión del análisis de autorreporte del in cumplimiento de las normas a la amenaza de boicot. Conclusiones: el análisis de la certificación privada de normas alimentarias debe tener en cuenta las estrategias óptimas de auditoría y aplicación, y sus costos asociados.

A model of vertical product differentiation is used to analyze the labeling of credence goods, focusing on the manner by which quality is communicated. The results indicate that firms prefer private labeling options. In addition, firms may hire private certifiers as well as paying for mandated government labels when the government's quality benchmark substantially deviates from firms' private quality choices. The average consumer prefers a mandatory, discrete label with a high-quality standard while poor consumers prefer a mandatory, discrete label with a low standard.

In this article, the effectiveness of policy creating science parks is evaluated with respect to small- and medium-sized enterprises (SMEs). Science parks created to support innovation and regional growth often target productivity gains through agglomeration economies. However, spatial proximity of firms may also stimulate selection, less competitive firms being forced to exit, a cluster of high-productivity, surviving firms being observed at the regional level. Empirical studies also show that high- or low-productivity firms or both may spatially sort into a region. Using estimates of firm-level total factor productivity, the science park sorting and selection behavior of Taiwanese and South Korean SMEs is analyzed. The results indicate heterogeneity in location choice of SMEs arising from the economic environment of science parks. Overall, the empirical evidence suggests that science parks can generate real productivity improvements if the incentives are reinforced through national-level policies; otherwise, such incentives may end up protecting inefficient firms.