Principles of Agricultural Economics: Markets and Prices in Less Developed Countries

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Cambridge University Press, Feb 9, 1989 - Business & Economics - 323 pages
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This textbook addresses the main economic principles required by agricultural economists involved in rural development. The principles of 'micro-economics' or 'price-theory' are of relevance to economists everywhere, but this book reinforces the message of their relevance for rural development by explaining the theory in the specific context of the agricultural and food sectors of developing countries. Hypothetical and actual empirical illustrations drawn almost exclusively from such countries distinguish this book from other economic principles texts that draw their examples almost invariably from industrialised countries, and also from books more oriented to the issue of rural development. The first half of the book deals with the underlying principles of production, supply and demand. These are essential tools for the study and management of the agricultural sector and food markets. In the second half, supply and demand are bought together into a chapter of equilibrium and exchange. This is followed by chapters on trade and the theory of economic welfare. In the final chapter it is shown that much of the material in the earlier chapters can be combined by agricultural economists into a system for analysing and comparing the effects of alternative agricultural policies. The ability of agricultural economics to provide a consistent framework for the analysis of policy problems thus enables it to make a key contribution to rural development.
 

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Contents

Introduction
1
Economics of agricultural production theoretical foundations
5
22 Physical relationships
6
221 The factorproduct relationship
7
222 The factorfactor relationship
13
223 The productproduct relationship
16
23 Economic relationships
18
the factorfactor relationship
19
83 Equilibrium in product markets
138
832 Dynamics
146
84 Production and consumption activities within the agricultural household
152
841 The theory of the agricultural household
153
842 The Zgoods model of the agricultural household
163
85 Conclusions
164
86 Summary points
165
Analysis of agricultural markets
167

the productproduct relationship
27
the general case
28
24 Summary points
29
Product supply and input demand
30
32 Product supply
31
321 The need for a dynamic specification
36
33 Demand for inputs
40
331 The competitive model of input demand
41
332 Asset fixity in agriculture
46
34 Conclusions
47
35 Summary points
48
Topics in production economics
49
42 Efficiency of resource use
50
422 The myth of efficiency
52
43 Technological change
53
432 Sources of technological change
59
433 Adoption and diffusion of new technologies
60
44 Risk and uncertainty
64
45 Duality
66
46 Conclusions
69
Theory of consumer behaviour
72
52 The basic relationships
73
53 The analysis of consumer choice
76
54 Variations in the consumers equilibrium
81
55 Income and substitution effects
85
56 Summary points
89
Economics of market demand
91
622 The market demand function
92
623 Shifts in the market demand curve
94
63 Elasticities of demand
95
631 The ownprice elasticity of demand
96
632 Crossprice elasticity of demand
100
633 The income elasticity of demand
101
64 Properties of demand functions
105
642 The Slutsky equation and Slutsky symmetry
106
643 Engel aggregation
107
65 Dynamics in demand analysis
108
66 Conclusions
110
67 Summary points
112
Developments in demand theory
113
722 Beckers model of consumer demand
119
73 Duality in demand analysis
121
74 Conclusions
122
75 Summary points
123
Equilibrium and exchange
125
82 The definition of equilibrium
126
821 Partial vs general equilibrium
128
822 Existence uniqueness and stability of an equilibrium
130
823 Disequilibrium
132
824 Interference with equilibrium
134
92 Degrees of market competition
168
922 Monopoly
170
923 Monopsony
181
93 Structure and functions of agricultural markets
186
931 Market institutions
187
932 Market functions
189
94 Simultaneous equilibrium at two market levels
190
95 Marketing margins and farm prices
193
96 Conclusions
195
97 Summary points
196
Welfare economics
198
102 Competitive markets and Pareto optimality
200
1021 The exchange efficiency criterion
201
1022 The production efficiency criterion
203
1023 The top level criterion
205
103 Reasons for policy intervention in markets
206
104 Welfare criteria for policy choice
209
105 Consumer and producer surplus
211
106 The problem of the second best
217
107 Conclusions
220
108 Summary points
221
Economics of trade
224
112 Trade theory
226
1122 HeckscherOhlin theory of trade
232
1123 Ventforsurplus
234
113 Trade equilibrium with no transport costs
235
114 Trade with international transport and handling charges
240
115 Terms oftrade
245
1151 Measuring termsoftrade
246
1152 Interpreting measures of the termsoftrade
249
116 Trade intervention
253
1162 Nontariff barriers to trade
255
1163 Reasons for trade intervention
257
117 Conclusions
258
118 Summary points
262
Food and agricultural policy
264
121 Nature and principles of policy
265
1212 Classification of instruments of policy
268
1213 Rules of policy
272
122 Analysing the effects of policy instruments
273
1222 Classifying the effects of agricultural policy
282
123 Economic analysis of selected agricultural policies
285
1232 Egypts wheat procurement and distribution policy
290
124 Conclusions
294
125 Summary points
296
Notes
298
References
308
Index
314
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About the author (1989)

David Colman is Professor of Agricultural Economics at the University of Manchester. He is President-Elect of the International Association of Agricultural Economists and a past President of the Agricultural Economics Society in the UK. He has acted as expert advisor to the House of Commons Agriculture Committee on two occasions in relation to the dairy sector policy, and has been an expert witness and advisor in a number of court cases relating to the milk industry. David Colman has undertaken research projects and consulting contracts for various international bodies, including OECD, FAO, WHO, the World Bank, ODA, and the Canadian, Malawian, and Saudi Arabian Governments. He is co-author of textbooks on the Principles of Agricultural Economics, and Economics of Change in Less-Developed Countries. His main areas of research are agricultural supply response, dairy sector policy, price formation, and commodity modelling. Colman, was the Vice-President of IAAE in charge of the programme for the 25th IAAE Conference in Durban.


Nick Vink has been Chair of the Department of Agricultural Economics at the University of Stellenbosch, South Africa since 1996. He spent 11 years at the Development Bank of Southern Africa as a senior policy analyst for rural and agricultural development issues during South Africa's transition to democracy. His interests include land reform, agricultural policy, structural reform, and small farmer development.

Trevor L. Young is an independent consultant specializing in the introduction of program management. He is a member of the Institute of Personnel and Development and is the author of The Handbook of Project Management (also published by Kogan Page).