Members in the News: Innes, Dorfman, Hurt, Boehlje, Malone, Lusk, & Smith

Robert Innes, University of California, Merced Can Mergers Cause Mergers? Yes, And It Can Be A Good Thing Written by: Jeffrey Dorfman, University of Georgia By: Forbes - April 10, 2017 Many American industries have become more concentrated over the past few decades with the largest firms capturing a growing share of the market. People with an anti-corporate bias oppose this industry consolidation believing that increasing concentration leads to less competition, higher consumer prices, and excess profits for the few behemoths left. Corporate leaders also seem convinced that larger corporations are more profitable because otherwise they wouldn’t be pursuing the mergers. However, that does not mean that higher prices and less competition also result from the undeniable concentration in many industries. In fact, some recent research suggests that there are some positive attributes of all these mergers. A recent paper in the American Journal of Agricultural Economics by Haimanti Bhattacharya and Rob Innes examined the effect of concentration on new product introductions in the food industry. They find that higher levels of concentration lead to a larger number of new products, partly from small firms hoping that a successful product will lead to a large firm buying them. This entry-for-merger strategy is not confined to the food industry; for example, it is also a common strategy in the tech sector. As reported by Hadi Partovi, many tech start-ups have located in Seattle with a business plan of becoming just successful enough for Microsoft to buy them out. (Continued...) Read the entire article on Forbes

Chris Hurt, Purdue University How bad is this farm slump? By: The Economist - March 30, 2017 But unlike the previous big crisis, the balance-sheets of many farmers are robust. Moreover, interest rates are still low and demand remains steady even if it isn’t growing much any more. And although the values for farmland dropped last year for only the second time since the 1980s, these drops were far less dramatic than they were back then: the value of land in Indiana, for instance, fell nearly 60% between 1981 and 1986. “This boom was not as strong and we don’t anticipate this crisis to be as severe as in the 1980s,” says Christopher Hurt at Indiana’s Purdue University. (Continued...) Read the entire article on The Economist

Michael Boehlje, Purdue University Ink About Ag: How do you win in tough times? By: Farm Forum - April 11, 2017 Michael Boehlje let people know he considers himself a farmer who faces tough decisions every year. Each year he plans to reduce costs by 10 percent through better decisions. He shared his thoughts in a speech presented by the NSU School of Business and Dacotah Bank with an audience of farmers, business students and area business people. (Continued...) Read the entire article on Farm Forum

Trey Malone & Jayson Lusk, Oklahoma State University Opinion: How can craft beer companies survive? Use ratings By: Market Watch - April 9, 2017 So how does a bar or restaurant move beer that’s outside the top 20? In this month’s Journal of Behavioral and Experimental Economics, Oklahoma State University doctoral candidate Trey Malone and OSU economist Jayson Lusk suggest that providing more information with that beer is essential to its success in a crowded marketplace. Malone’s experience with beer in Oklahoma led him to believe that drinkers there might be adversely affected by a sudden deluge of beer choices. “I wondered if I could find a place with a small amount of options, increase the number of options, and see if I can kind of induce that excessive choice problem,” Malone says. “It wouldn’t happen everywhere: If I went to a craft beer bar and doubled the number of beers, I don’t think that would reduce the chance that somebody would order a beer. At a wine bar, that might be the case.” He and Lusk choose a wine bar in Stillwater as the site of their experiment, figuring that the bar’s lack of beer options would trigger the Excessive Choice Effect. That’s a theory put forth by Swarthmore College professor Barry Schwartz in his book, “The Paradox of Choice,” in which he said too many choices make consumers feel anxious and helpless about their decisions. (Continued...) Read the entire article on Market Watch Martin D. Smith, Duke University The Race To Fish Slows Down. Why That's Good For Fish, Fishermen And Diners By: NPR's The Salt - April 5, 2017 A new study published online Wednesday in the journal Nature proves they're right. "This is the first time we see broad systematic evidence that catch shares are slowing the race to fish," says study co-author Martin Smith, professor of environmental economics at the Nicholas School of the Environment at Duke University. (Continued...) Read the entire article on NPR's The Salt

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