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Production Choices of Farm Households: Institutional and Behaviourial Aspects in Economic Theory

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  • Mariapia Mendola

Abstract

This paper reviews the main theoretical and empirical contributions analysing production choices of farm households in the developing countries, where the markets are imperfect and incomplete. Recent developments in the micro-economic literature have highlighted the existence of a trade-off between the income risk and expected returns to investments for households taking production decisions in imperfect and incomplete markets. In particular, farm households tend to invest in low-risk, low-return activities; and in some cases, poorly endowed, risk-averse farm households might even be caught in a poverty-trap, as they are unable to accumulate savings and make profitable investments to escape poverty.

Suggested Citation

  • Mariapia Mendola, 2006. "Production Choices of Farm Households: Institutional and Behaviourial Aspects in Economic Theory," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 2, May.
    • Handle: RePEc:rar:journl:0035
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    References listed on IDEAS

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    More about this item

    Keywords

    Farm Households; Production Choices; Income-Smoothing; Poverty;
    All these keywords.

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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