AARES VIC Branch Meeting

Date

Time

5:00pm - 6:00pm

Venue

University of Melbourne: Lower Theatre, Faculty of Veterinary and Agricultural Sciences (Agriculture) Building 142

Speakers

Description

Presentation Topic: "Voluntary Regulation of an Externality under Competition: Are Farmers Good Neighbours?”       

AARES VICTORIAN BRANCH INVITES YOU TO ATTEND THIS EVENT

Join us for a special presentation by Professor Rachael Goodhue, UC Davis - "Voluntary Regulation of an Externality under Competition: Are Farmers Good Neighbors?”.  Our other special guests include:

• Professor Richard Gray, University of Saskatchewan
• Professor Julian Alston, University of California, Davis

Abstract: Is government intervention necessary to restrain the behavior of firms? The most common form of intervention-free restraint is voluntary regulation, which occurs when a firm restrains its own behavior. While there is evidence of voluntary regulation in a wide variety of markets, all are concentrated, and competition squeezes out voluntary regulation. In this paper, we test if firms in a competitive market for an undifferentiated product can voluntarily regulate an externality of their production. Using detailed data on thousands of externality-generating actions by hundreds of atomistic firms producing an undifferentiated product, we provide the first empirical evidence of voluntary regulation in a competitive market. Our setting also allows us to identify the mechanism of voluntary regulation. The setting we focus on is the production of almonds in California, where the externality-generating action is pesticide applications, particularly those near schools. Almonds are an undifferentiated product grown by many price-taking producers. We can identify voluntary regulation using within-firm variation in orchard distance to a school because over 500 producers in our sample operated multiple almond orchards. The main channel of nonoccupational exposure to pesticides is called "drift," which occurs when pesticides or their breakdown products move away from their intended target in the air. We find statistically and economically significant evidence of voluntary regulation. Exploiting heterogeneity in application characteristics, we eliminate pure altruism as the mechanism for voluntary regulation, implying producers in a competitive market can voluntarily regulate to avoid stronger inventions in the future. 

About the presenter

Rachael Goodhue is the Professor and Chair, Agricultural and Resource Economics at the University of California, Davis Campus. Professor Goodhue specialises in agricultural organisation and marketing, agricultural contracts, agri-environmental policy and regulation, pesticide use and regulation, applications of fuzzy logic in economics, economics of invasive species, property rights, and natural resources. She also teaches courses regarding the industrial organisation of agriculture and microeconomics as well as a course on California agriculture that includes weekly seminars and a variety of field study trips to various California agricultural regions.

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About the event

Location: University of Melbourne, Lower Theatre, Faculty of Veterinary and Agricultural Sciences (Agriculture) Building 142.  Click here for map
Cost: This event is FREE for members and non-members
RSVP: by Wednesday 12 April, 2023
Time: 5:00pm - 6:00pm, followed by drinks and nibblies at Naughtons Pub.
For any enquiries, please contact Nick Tsaktsiras.