This article develops an Indifference Pricing model for a weather derivative that is traded over the counter. The model is used to calculate ask and bid prices for a put option on a weather index in Germany. We find that under moderate risk aversion the maximal bid prices of grain producers...

Agrarian structures are often characterized by some kind of economic inertia. It is particularly puzzling why unprofitable farms persist over time instead of being sold. In this paper we analyze the exit decision of farmers using the real options approach. The validity of the real options theory...

Weather risk is one of the main causes for income fluctuation in agriculture. Since 1997, the economic consequences of weather risk can be insured with weather derivatives, which are offered for many different weather events, such as temperature, rainfall, snow or hurricanes. It is well known...

This paper addresses the question of financial constraints in Ukrainian agriculture in transition. The main objective is to reveal the evidence of the both phenomena, soft budget constraints and credit rationing, investigating investment behaviour of large farms in Ukraine. Our empirical...

The sharp increase in agricultural commodity prices in 2008 and in 2011 has triggered an intensive debate on the causes for these price booms. Speculative bubbles have been quoted as one factor among others for the price peaks. Against this background, our paper contributes to this discussion by...

The implementation of index-based crop insurance is often impeded by the existence of systemic risk of insured losses. We assess the effectiveness of two strategies for coping with systemic risk: regional diversification and securitization with catastrophe (CAT) bonds. The analysis is conducted...

Agent-based models (ABM) are used in many cases of policy assessment in agriculture. But the behavioural assumptions of these models consider farmers as myopic optimizing profit maximizers. In this contribution we compare the behaviour of myopic computer agents with the behaviour of students...

Due to several existing limitations for the use of silage maize as biogas substrate, flowering cover crops are currently a much-discussed alternative. Using a business simulation game, the present study investigates whether the implementation of a reward and a penalty policy will improve the...

Empirical studies on farmland rental rates have predominantly concentrated on modelling conditional means using spatial autoregressive models, where a linear functional form be- tween the response and the covariates is assumed. This paper extends the hedonic pricing literature by modelling...

Despite the economic benefits of organic farming, the conversion rates to this production method are low. The reasons for this reluctance are largely unknown; however, they are important for policy recommendations. Therefore, we experimentally investigate and compare the investment behavior of...