DISCOUNT SCHEDULES AND GROWER INCENTIVES IN GRAIN MARKETING

In this paper we develop a microeconomic optimization model of grain e levator cleaning and commingling decisions when the firm is faced with different discounting schedules. Using generalizations of Jensen's in equality, it is shown that a convex (concave) discount schedule encour ages commingling (cleaning). However, a separate market fur cleanings may qualitatively alter the optimal arrangement of grain. Wheat elevat or records are studied to discern whether alternative discount schedul es provide elevators with opportunities to cover the casts al rearrang ing grain composition. Rearrangement activities appear tu be marginall y profitable for some dockage levels.