HEDONIC PRICES IN THE MALTING BARLEY MARKET



Wilson


Hedonic Prices

Marginal implicit prices for the quality
characteristics were derived from the es-
timated coefficients. The marginal implic-
it price for protein was negative (imply-
ing a discount) as expected, constant across
the range of protein, and constant across
varieties in each year except 1979/80. The
marginal implicit price for plumpness de-
pended on the level of plumpness and var-
ied across varieties except in 1981/82. An
important observation on the behavior of
these marginal implicit prices is that the
premium for plumpness increased during
the first three years of the study and the
discounts for protein have increased every
year from 7.2$ per bushel to 13$ per bush-
el for a 1 percent change in protein. These
results have important implications for
plant breeders and for participants
throughout the production∕marketing
system for malting barley. Large expen-
ditures are made in plant breeding to im-
prove the quality of malting barley
through improved varieties. The results of
this study provide a measure of the eco-
nomic value of plumpness and protein and
could be incorporated into plant breeding
programs. These results could also be use-
ful to producers in variety selection and
production decisions to the extent that
protein and plumpness levels can be influ-
enced by soil selection and nitrogen use.
Country elevators, merchandisers, malts-
ters, and, to a certain extent, brewers have
long been aware of the uncertainty asso-
ciated with marketing malting barley and
of the implicit discounts for protein and
premiums for plumpness. This study pro-
vides empirical results of the value of the
inherent varietal premiums, implicit dis-
counts for protein, and premiums for
plumpness.

References

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Carl, E. K., R. L. Kilmer, and L. W. Kenny. “Eval-
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Court, A. T. “Hedonic Price Indexes with Automo-
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The Dynamics of Automobile
Demand,
The General Motors Corporation, New
York, 1939.

Crabtree, J. “Quality Price Differentials in Malting
Barley.” Unpublished Masters thesis, Department
of Agricultural Economics, North Dakota State
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Edmonds, R. G. “Travel Time Valuation Through
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Southern Economic Jour-
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Ethridge, D. E. and B. Davis. “Hedonic Price Esti-
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Griliches, Z., ed. Price Indexes and Quality Change.
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39




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