THREE ESSAYS ON HOPS PRODUCTION, BEER PRICE INPUTS, AND BEER DEMAND

Xi Gu

The dissertation focus on beer economics in three aspects: the production of beer input hops, price analysis for beer inputs hops and barley and the consumer demand analysis for four different beer flavors. The first paper mainly explores the interaction of two different pesticides including conventional regulated pesticide and environmental friendly pesticide on hops production under policy control, grower’s risk attitudes and uncertainties. A new theoretical model with joint conditional distribution of output and residues is defined. By using Monte-Carlo simulation, the substitute relationship between two pesticides with respect to both policy and price are confirmed. Other results involving risk alternative and uncertainties are also reported. The second paper investigates the price linkage and volatility spillover effects of hops and barley with other agricultural products (soft red wheat, hard red wheat and corn). The Vector Autoregression model and the Vector Error Correction model are used to estimate the short-run and long-run price relationship, then we use the Autoregressive Conditional Heteroscedasticity model to analyze the spillover effects. Based on the results, hops have long run price relationship with barley, and barley has long run price relationship with all other agricultural products. Spillover effects are also proven and transferred from wheat, corn to hops and barley. The third paper estimates the demand of four different beer flavors including ale, pale lager, dark lager and others. Different with traditional demand analysis, this paper considers the correlation among beer flavors, the corner solution and the high dimensional estimation. The Linear Expenditure System is estimated using the Simulated Maximum Likelihood combined with Kuhn-Tucker approach. We also compare this method with Two-Step Seemingly Unrelated Regression and single Tobit model. The results of price elasticities indicate the substitution relationship among four beer flavors. The demographic effects consist of education level, the presence of child, marriage status and income will affect the decision making in the choice of different beer flavors. Finally, the results are different between Simulated Maximum Likelihood and Two-Step estimator. The Simulated Maximum Likelihood is preferable in both theoretical and empirical.

THREE ESSAYS ON HOPS PRODUCTION, BEER PRICE INPUTS, AND BEER DEMAND

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