IDEAS home Printed from https://ideas.repec.org/a/ags/arerjl/31525.html
   My bibliography  Save this article

Modeling Fresh Tomato Marketing Margins: Econometrics And Neural Networks

Author

Listed:
  • Richards, Timothy J.
  • Patterson, Paul M.
  • van Ispelen, Pieter

Abstract

This study compares two methods of estimating a reduced form model of fresh tomato marketing margins: an econometric and an artificial neural network (ANN) approach. Model performance is evaluated by comparing out-of-sample forecasts for the period of January 1992 to December 1994. Parameter estimates using the econometric model fail to reject a dynamic, imperfectly competitive, uncertain relative price spread margin specification, but misspecification tests reject both linearity and log-linearity. This nonlinearity suggests that an inherently nonlinear method, such as a neural network, may be of some value. The neural network is able to forecast with approximately half the mean square error of the econometric model, but both are equally adept at predicting turning points in the time series.

Suggested Citation

  • Richards, Timothy J. & Patterson, Paul M. & van Ispelen, Pieter, 1998. "Modeling Fresh Tomato Marketing Margins: Econometrics And Neural Networks," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(2), pages 1-14, October.
    • Handle: RePEc:ags:arerjl:31525
    DOI: 10.22004/ag.econ.31525
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/31525/files/27020186.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.31525?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gorr, Wilpen L. & Nagin, Daniel & Szczypula, Janusz, 1994. "Comparative study of artificial neural network and statistical models for predicting student grade point averages," International Journal of Forecasting, Elsevier, vol. 10(1), pages 17-34, June.
    2. Nicholas J. Powers, 1995. "Sticky short-run prices and vertical pricing: Evidence from the market for iceberg lettuce," Agribusiness, John Wiley & Sons, Ltd., vol. 11(1), pages 57-75.
    3. Bruce L. Gardner, 1975. "The Farm-Retail Price Spread in a Competitive Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 399-409.
    4. Davidson, Russell & MacKinnon, James G, 1981. "Several Tests for Model Specification in the Presence of Alternative Hypotheses," Econometrica, Econometric Society, vol. 49(3), pages 781-793, May.
    5. Henriksson, Roy D & Merton, Robert C, 1981. "On Market Timing and Investment Performance. II. Statistical Procedures for Evaluating Forecasting Skills," The Journal of Business, University of Chicago Press, vol. 54(4), pages 513-533, October.
    6. Garth J. Holloway, 1991. "The Farm-Retail Price Spread in an Imperfectly Competitive Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 979-989.
    7. Dale M. Heien, 1980. "Markup Pricing in a Dynamic Model of the Food Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(1), pages 10-18.
    8. Azzam, Azzeddine M. & Schroeter, John R., 1991. "Implications Of Increased Regional Concentration And Oligopsonistic Coordination In The Beef Packing Industry," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 16(2), pages 1-8, December.
    9. Catherine A. Durham & Richard J. Sexton, 1992. "Oligopsony Potential in Agriculture: Residual Supply Estimation in California's Processing Tomato Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(4), pages 962-972.
    10. Henry W. Kinnucan & Robert G. Nelson, 1993. "Vertical Control and the Farm-Retail Price Spread for EGGS," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 15(3), pages 473-482.
    11. Ronald W. Ward, 1982. "Asymmetry in Retail, Wholesale, and Shipping Point Pricing for Fresh Vegetables," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(2), pages 205-212.
    12. Gary D. Thompson & Charles C. Lyon, 1989. "Marketing Order Impacts on Farm-Retail Price Spreads: The Suspension of Prorates on California-Arizona Navel Oranges," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(3), pages 647-660.
    13. Waugh, Frederick V., 1964. "Demand and Price Analysis: Some Examples from Agriculture," Technical Bulletins 171213, United States Department of Agriculture, Economic Research Service.
    14. Faminow, Merle D. & Laubscher, J. M., 1991. "Empirical testing of alternative price spread models in the South African maize market," Agricultural Economics, Blackwell, vol. 6(1), pages 49-66, October.
    15. Charles C. Lyon & Gary D. Thompson, 1993. "Temporal and Spatial Aggregation: Alternative Marketing Margin Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 523-536.
    16. Joerding, Wayne H. & Li, Ying & Young, Douglas L., 1994. "Feedforward Neural Network Estimation Of A Crop Yield Response Function," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 26(1), pages 1-12, July.
    17. Michael K. Wohlgenant, 1985. "Competitive Storage, Rational Expectations, and Short-Run Food Price Determination," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(4), pages 739-748.
    18. B. Wade Brorsen & Jean-Paul Chavas & Warren R. Grant & L. D. Schnake, 1985. "Marketing Margins and Price Uncertainty: The Case of the U.S. Wheat Market," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(3), pages 521-528.
    19. Henry W. Kinnucan & Olan D. Forker, 1987. "Asymmetry in Farm-Retail Price Transmission for Major Dairy Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(2), pages 285-292.
    20. Terry L. Kastens & Gary W. Brester, 1996. "Model Selection and Forecasting Ability of Theory-Constrained Food Demand Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 301-312.
    21. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057, Elsevier.
    22. Terry L. Kastens & Allen M. Featherstone, 1996. "Feedforward Backpropagation Neural Networks in Prediction of Farmer Risk Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(2), pages 400-415.
    23. Kyle W. Stiegert & Azzeddine Azzam & B. Wade Brorsen, 1993. "Markdown Pricing and Cattle Supply in the Beef Packing Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 549-558.
    24. John Schroeter & Azzeddine Azzam, 1991. "Marketing Margins, Market Power, and Price Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 990-999.
    25. Brester, Gary W. & Mustek, Douglas C., 1995. "The Effect of Market Concentration on Lamb Marketing Margins," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 27(1), pages 172-183, July.
    26. Merle D. Faminow & J.M. Laubscher, 1991. "Empirical testing of alternative price spread models in the South African maize market," Agricultural Economics, International Association of Agricultural Economists, vol. 6(1), pages 49-66, October.
    27. Cotterill, Ronald W, 1986. "Market Power in the Retail Food Industry: Evidence from Vermont," The Review of Economics and Statistics, MIT Press, vol. 68(3), pages 379-386, August.
    28. Carlson, Gerald A. & Zilberman, David & Miranowski, John, 1993. "Agricultural and Resource Economics," Staff General Research Papers Archive 11104, Iowa State University, Department of Economics.
    29. Appelbaum, Elie, 1982. "The estimation of the degree of oligopoly power," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 287-299, August.
    30. Jeffrey H. Dorfman & Christopher S. McIntosh, 1990. "Results of a Price Forecasting Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 72(3), pages 804-808.
    31. Joerding, Wayne H. & Li, Ying & Young, Douglas L., 1994. "Feedforward Neural Network Estimation of a Crop Yield Response Function," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 26(1), pages 252-263, July.
    32. Brester, Gary W. & Musick, Douglas C., 1995. "The Effect Of Market Concentration On Lamb Marketing Margins," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-12, July.
    33. Matthew T. Holt, 1993. "Risk Response in the Beef Marketing Channel: A Multivariate Generalized ARCH-M Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 559-571.
    34. Douglas D. Parker & David Zilberman, 1993. "Hedonic Estimation of Quality Factors Affecting the Farm-Retail Margin," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 458-466.
    35. Nowrouz Kohzadi & Milton S. Boyd & Iebeling Kaastra & Bahman S. Kermanshahi & David Scuse, 1995. "Neural Networks for Forecasting: An Introduction," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 43(3), pages 463-474, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jesse Tack & Ardian Harri & Keith Coble, 2012. "More than Mean Effects: Modeling the Effect of Climate on the Higher Order Moments of Crop Yields," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 94(5), pages 1037-1054.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carambas, Maria Cristina D.M., 2005. "Analysis of Marketing Margins in Eco-Labeled Products," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24600, European Association of Agricultural Economists.
    2. Richards, Timothy J. & Patterson, Paul M., 2000. "New Varieties And The Returns To Commodity Promotion: The Case Of Fuji Apples," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 29(1), pages 1-14, April.
    3. Richards, Timothy J. & Patterson, Paul M., 1998. "New Varieties and the Returns to Commodity Promotion: Washington Fuji Apples," Working Papers 28541, Arizona State University, Morrison School of Agribusiness and Resource Management.
    4. Griffith, Garry R. & Moore, Walter B., 1991. "Livestock Production Policies And Meat Processing Margins: The Case Of New Zealand, 1967-1988," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 35(1), pages 1-28, April.
    5. Lyon, Charles C. & Thompson, Gary D., 1991. "Model Selection With Temporal And Spatial Aggregation: Alternative Marketing Margin Models," Staff Papers 13253, University of Minnesota, Department of Applied Economics.
    6. Robert Romain & Maurice Doyon & Mathieu Frigon, 2002. "Effects of state regulations on marketing margins and price transmission asymmetry: Evidence from the New York City and upstate New York fluid milk markets," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 301-315.
    7. Frigon, Mathieu & Doyon, Maurice & Romain, Robert F.J., 1999. "Asymmetry in Farm-Retail Price Transmission in the Northeastern Fluid Milk Market," Research Reports 25220, University of Connecticut, Food Marketing Policy Center.
    8. Daphne M.I. Verreth & Grigorios Emvalomatis & Frank Bunte & Ron Kemp & Alfons G.J.M. Oude Lansink, 2015. "Price Transmission, International Trade, and Asymmetric Relationships in the Dutch Agri‐Food Chain," Agribusiness, John Wiley & Sons, Ltd., vol. 31(4), pages 521-542, October.
    9. Ronchi, Loraine, 2006. "Fairtrade and market failures in agricultural commodity markets," Policy Research Working Paper Series 4011, The World Bank.
    10. Fabio Gaetano Santeramo, 2015. "Price Transmission in the European Tomatoes and Cauliflowers Sectors," Agribusiness, John Wiley & Sons, Ltd., vol. 31(3), pages 399-413, June.
    11. Muth, Mary K. & Wohlgenant, Michael K., 1998. "A Model Of Imperfect Competition Using Marginal Input And Output Prices: Application To The Beef Packing Industry," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20853, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Jones, Rodney & Purcell, Wayne & Driscoll, Paul & Peterson, Everett, 1996. "Issues and Cautions in Employing Behavioral Modeling Approaches to Test for Market Power," Staff Papers 232517, Virginia Polytechnic Institute and State University, Department of Agricultural and Applied Economics.
    13. Steenkamp, P. J. D. & Sartorius von Back, H. J. & Viviers, L. & Millard, S., 1995. "Marketing Margin Analysis Of South African Potatoes," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 34(3), September.
    14. Hansmire, Michelle R. & Willett, Lois Schertz, 1993. "Price Transmission Processes: A Study of Price Lags and Asymmetric Price Response Behavior for New York Red Delicious and McIntosh Apples," Research Bulletins 123011, Cornell University, Department of Applied Economics and Management.
    15. Azzam, Azzeddine M., 1998. "Competition in the US meatpacking industry: is it history?," Agricultural Economics, Blackwell, vol. 18(2), pages 107-126, March.
    16. Rahman, Mohammad Chhiddikur, 2020. "Welfare Impact of Asymmetric Price Transmission on Bangladesh Rice Consumers," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 242248, July.
    17. repec:ags:vtaesp:232464 is not listed on IDEAS
    18. Holloway, Garth J. & Peyton, L. James & Griffith, Garry R., 2000. "Was the Australian Meat and Live-stock Corporation's advertising efficient?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), pages 1-27.
    19. Vigne, W. J. F. & Darroch, M. A. G., 1996. "Determinants Of The Maize Board-Miller Marketing Margin In South Africa : 1977-1993," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 35(4), December.
    20. Brester, Gary W. & Musick, Douglas C., 1995. "The Effect Of Market Concentration On Lamb Marketing Margins," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 27(1), pages 1-12, July.
    21. Holloway, Garth J. & Hertel, Thomas W. & Han, Frank M., 1997. "Does Market Power Matter?," Working Papers 225884, University of California, Davis, Department of Agricultural and Resource Economics.

    More about this item

    Keywords

    Marketing;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:arerjl:31525. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/nareaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.