A multi-stage hedonic analysis of cotton fiber attribute values in the Texas and Oklahoma producer cotton markets

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Title: A multi-stage hedonic analysis of cotton fiber attribute values in the Texas and Oklahoma producer cotton markets
Author: Hoelscher, Kevin Richard
Abstract: The objective of this study was to determine how changes in cotton fiber attribute values for the Texas and Oklahoma cotton marketing regions are influenced by separate buyer and seller actions with regard to these attributes . This study utilized daily spot market transactions for the 1993 /94 through 1999 /2000 marketing years for Texas and Oklahoma to formulate hedonics model for each year and capture the effects of fiber quality attributes on spot market prices . These models were used to derive the marginal implicit price of each characteristic for each day of the seven -year period , which were then aggregated to produce an average marginal implicit price for each week of this period . The marginal implicit values were then examined by formulating second -stage hedonic models to represent the bid and offer functions of cotton sellers and buyers for each characteristic . These models were estimated simultaneously using price -dependant offer functions and characteristic -dependant bid functions . The results of the first -stage hedonic analysis and the derivation of the marginal implicit prices of each characteristic revealed results in which undesirable characteristics had an adverse impact on cotton prices , resulting in negative marginal implicit prices . Beneficial or desirable quality characteristics were characterized by positive marginal implicit prices , reflecting their positive impact on cotton prices . Second -stage results showed offer functions in which buyers were willing to pay more for higher levels of desirable characteristics and less for higher levels of undesirable characteristics . These offer functions were affected by external factors such as trends in characteristic values as well as forward contracting and net exports levels . Additionally , the previous month's general level of cotton prices indicated that an increasing general price level caused a reduction in the prices of certain characteristics . Estimated producer bid functions indicated that producers would expect higher payments for higher levels of desirable characteristics and would accept lower prices for higher levels of undesirable characteristics . These bid functions were affected by external stimuli such as characteristic price trends , trends in characteristic levels , forward contracting levels and environmental variables such as rainfall and temperature . The results of this study provide an empirical application of a two -stage hedonic framework , and is the first to present the perspective that second -stage hedonic estimation is the estimation of characteristic bid and offer functions rather than supply /demand relationships . In addition , several questions were raised concerning the relationship between general price levels and characteristic price levels as well as the contribution of characteristic values to the overall price of a commodity . This study provides the groundwork for future research which can be devoted to answering these questions .
URI: http : / /hdl .handle .net /2346 /10555
Date: 2001-05

Citation

Hoelscher, Kevin Richard A multi-stage hedonic analysis of cotton fiber attribute values in the Texas and Oklahoma producer cotton markets. Master's thesis, Texas Tech University. Available electronically from http : / /hdl .handle .net /2346 /10555 .

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