The Heterogeneity Book
The Heterogeneity Book

Accounting for Agent Heterogeneity
in Market and Policy Analysis

- Konstantinos Giannakas -

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About the Book

This book presents a multi-market framework of market and policy analysis that explicitly accounts for the empirically relevant heterogeneity in consumer preferences and producer characteristics. The explicit consideration of consumer and producer heterogeneity represents a significant departure from the representative consumer and producer that have been at the center of most of the literature on market and policy analysis, and enables the distributional impacts of changes in market conditions and policies to be fully identified. The framework is used to analyze the system-wide market and welfare impacts of a number of changes in market conditions (like changes in consumer preferences, costs and market structure) and policies (like subsidies and taxes) on one of the products in the system. Consistent with a priori expectations, the use of the framework unveils impacts masked by the conventional market and policy analysis.
The book builds on my published research during the past 20 years and is available at no charge. Instead, I encourage readers who are able to consider donating to the ASTIR CASNR Emergency Student Aid Fund that supports students with various emergency needs. The Fund was first established by my daughter Ritsa in 2015 when she was just 13 years old. Ritsa knew that there were students struggling financially in the pursuit of their educational dream and she asked that her Christmas and birthday gifts be money instead of materialistic items that year. The result became the foundational gift for the CASNR Starfish Fund, now known as the ASTIR CASNR Emergency Student Aid Fund.


Over the past two decades Dinos Giannakas has developed a powerful, integrated framework for modeling markets and policies that explicitly accounts for heterogeneity of producers and consumers. This book presents the framework and illustrates its potential for illuminating analysis of farm and food policy issues in a range of diverse applications. It is a valuable addition to the tool-kit for any applied economist and will serve as a useful resource for teachers and graduate students alike.

Julian Alston - Distinguished Professor, Department of Agricultural and Resource Economics, University of California, Davis

Dr. Giannakas has provided a valuable resource for those interested in modeling the market behavior of heterogeneous consumers and producers. The simple, yet powerful framework is useful in understanding the potential impacts of new product introductions, labels, taxes, subsidies, and other policies.

Jayson Lusk - Head and Distinguished Professor, Department of Agricultural Economics, Purdue University

Dinos Giannakas has been at the forefront in modeling agent heterogeneity in food markets on both the consumer and producer sides of the market and applying these methods to interesting and important problems. Now he has brought this body of work together and extended it to produce this excellent book. Readers who invest the time and energy to work through this in-depth analysis will benefit greatly from their investment.

Richard Sexton - Distinguished Professor, Department of Agricultural and Resource Economics, University of California, Davis

Macroeconomic and international economic researchers, among others, have made significant strides in incorporating heterogeneous agents into their models over the past two decades. In this new and challenging text, Dinos Giannakas does an excellent job of accounting for such heterogeneity in the food marketing chain. Drawing on an extensive body of published work, Professor Giannakas provides the reader with a theoretically consistent and compelling framework for analyzing economic interactions and public policy in an important sector of the economy.

Ian Sheldon - Andersons Chair of Agricultural Marketing, Trade and Policy, Department of Agricultural, Environmental, and Development Economics, The Ohio State University

No two producers or consumers are alike and a comprehensive treatment of heterogeneous economic agents in the agrifood sector has been long overdue. This is a wonderful book for those who want to understand such diverse issues as stakeholder behavior and their strategic interactions across the agrifood supply chain, or the differential distributional effects of agricultural policies and innovation among such stakeholders. For years, Professor Giannakas has contributed leading research in modeling the market behavior of heterogeneous economic agents. His synthesis and development of a comprehensive framework offered in this book might be his finest contribution yet.

Nicholas Kalaitzandonakes - Frank Miller Professor, Division of Applied Social Sciences, University of Missouri