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Production economics in the presence of risk

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  • Sriram Shankar

Abstract

This paper provides an overview of the literature on production under the influence of risk. Various specifications of stochastic production function such as models with additive and multiplicative uncertainty, Just and Pope model, output-cubical, stateallocable and state-general models are discussed. Further, criteria determining optimal producer behaviour are derived for deterministic production technology and for various kinds of state-contingent technologies such as output-cubical, state-specific, stateallocable and state-general technologies. Finally, a brief discussion is presented about the drawbacks of each of these specifications of technology.
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  • Sriram Shankar, 2012. "Production economics in the presence of risk," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 56(4), pages 597-620, October.
    • Handle: RePEc:bla:ajarec:v:56:y:2012:i:4:p:597-620
    DOI: j.1467-8489.2012.00600.x
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    1. Rasmussen, Svend, 2003. "Criteria for optimal production under uncertainty. The state-contingent approach," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 47(4), pages 1-30.
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    4. Rasmussen, Svend, 2004. "Optimizing Production under Uncertainty: Generalisation of the State-Contingent Approach and Comparison of Methods for Empirical Application," Unit of Economics Working Papers 24184, Royal Veterinary and Agricultural University, Food and Resource Economic Institute.
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    12. Jaramillo, Paul E. & Useche, Pilar & Barham, Bradford L. & Foltz, Jeremy D., 2010. "The State Contingent Approach to Farmers' Valuation and Adoption of New Biotech Crops: Nitrogen-Fertilizer Saving and Drought Tolerance Traits," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61860, Agricultural and Applied Economics Association.
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    Cited by:

    1. Raushan Bokusheva & Lajos Baráth, 2024. "State‐contingent production technology formulation: Identifying states of nature using reduced‐form econometric models of crop yield," American Journal of Agricultural Economics, John Wiley & Sons, vol. 106(2), pages 805-827, March.
    2. Tomasz Gerard Czekaj & Arne Henningsen, 2013. "Panel Data Nonparametric Estimation of Production Risk and Risk Preferences: An Application to Polish Dairy Farms," IFRO Working Paper 2013/6, University of Copenhagen, Department of Food and Resource Economics.

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