Course Number: AGEC 0602
Course Title: Advanced Agricultural Price 
Credit Hours: 3
Prerequisites: AGEC 0503 and EC ON 0502 or equivalent
Corequisite: None

OBJECTIVES: To give sufficient background to formulate and estimate theoretically 
            consistent and empirically defensible supply, demand, and price-spread 
            relationships useful for the analysis of agricultural pricing and marketing 
            problems. To provide a framework for benefit-cost analysis.

TEXT: None required. Readings will come from journal articles, research reports and book chapters.

GRADING: Exercises (10%), Class Paper (20%), Midterm (30%), Comprehensive Final (40%)

POLICIES: All quizzes will be announced. Student participation in class discussions is encouraged.
          Class attendance is not mandatory, but is highly correlated with test scores.

SPECIAL NEEDS: Any student requiring special accommodation should notify the instructor and
               contact Director, Program for Students with Disabilities, 1244 Haley Center

OUTLINE: 

WEEK
1Introduction
	Science and the Scientific Method 
		Generating Hypotheses 
		Replication
	Economic role of prices 
		Distributive and allocative functions
		Equilibrating functions within markets

2-5 Agricultural Supply Relations
	Economics of supply response and input market adjustment
	Supply elasticity and factor market response
		Time in supply analysis (short run, long run, and lagged response to price)
		Rigidities and irreversibilities in supply response (Fixed Asset Theory, Cochrane's
                    Response Function, Partial Adjustment Model)
		Price expectations and supply response (Naive, Adaptive, and Rational
                    Expectations Models)

6-9 Demand Relations for Agricultural Commodities
	Elements of demand theory applicable to food demand analysis
		Theoretical restrictions useful in applied work (adding up, homogeneity,
                    symmetry, and negativity)
	Elasticities and flexibilities
		Functional forms used in empirical demand studies (properties and limitations of 
                    ad hoc versus theory-based systems
		Time in demand analysis (short run, long run, and lagged response to 
                    price and income)

10-12 Marketing Margins, Derived Demand, and Price-Linkage Relations 
		Relationship between farm- and wholesale- and retail-level demand
                     elasticities (price transmission elasticities)
		Determinants of derived demand (Marshall's four "laws"; fixed- vs. 
                     variable proportions) 
		Empirical models (Markup, Relative price, Marketing cost, and Rational 
                     Expectations)

13-14 Equilibrium-Displacement Modeling
	The basic model  
	Vertical extensions 
	Horizontal extensions
		Applications (Price Bargaining, Product Research, Nonprice Promotion)

15 Presentation of Papers and Review

Justification for graduate student credit:

Lectures are math based and thus rigorous. Readings are primarily from journal
articles.  The material is designed to give students sufficient theoretical and 
quantitative background to do publishable research. 
	

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