Discount Schedules and Grower Incentives in Grain Marketing
AbstractIn this paper we develop a microeconomic optimization model of grain elevator cleaning and commingling decisions when the firm is faced with different discounting schedules. Using generalizations of Jensen's inequality, it is shown that a convex (concave) discount schedule encourages commingling (cleaning). However, a separate market for cleanings may qualitatively alter the optimal arrangement of grain. Wheat elevator records are studied to discern whether alternative discount schedules provide elevators with opportunities to cover the costs of rearranging grain composition. Rearrangement activities appear to be marginally profitable for some dockage levels. Copyright 1997, Oxford University Press.
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Bibliographic InfoArticle provided by Agricultural and Applied Economics Association in its journal American Journal of Agricultural Economics.
Volume (Year): 79 (1997)
Issue (Month): 3 ()
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Other versions of this item:
- Hennessy, David A. & Wahl, Thomas I., 1997. "Discount Schedules and Grower Incentives in Grain Marketing," Staff General Research Papers 10672, Iowa State University, Department of Economics.
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