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The potential inefficiency of using marketing margins in applied commodity price analysis, forecasting and risk management

Han, F. M. and Holloway, G. J. (1995) The potential inefficiency of using marketing margins in applied commodity price analysis, forecasting and risk management. In: NCR-134 Conference on Applied Commodity Price Analysis, Forecasting and Market Risk Management, 22-23 Apr 1996, Chicago, USA.

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Abstract/Summary

This paper examines the implications of using marketing margins in applied commodity price analysis. The marketing-margin concept has a long and distinguished history, but it has caused considerable controversy. This is particularly the case in the context of analyzing the distribution of research gains in multi-stage production systems. We derive optimal tax schemes for raising revenues to finance research and promotion in a downstream market, derive the rules for efficient allocation of the funds, and compare the rules with an without the marketing-margin assumption. Applying the methodology to quarterly time series on the Australian beef-cattle sector and, with several caveats, we conclude that, during the period 1978:2 - 1988:4, the Australian Meat and Livestock Corporation optimally allocated research resources.

Item Type:Conference or Workshop Item (Paper)
Refereed:Yes
Divisions:Faculty of Life Sciences > School of Agriculture, Policy and Development > Economic and Social Sciences Division > Food Economics and Marketing (FEM)
ID Code:30683

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