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The evolution of farm size distribution: revisiting the Markov chain model

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  • Piet, Laurent

Abstract

In this paper, a continuous version of the Markov Chain Model (MCM) is proposed to project the number and the population structure of farms. It is then applied to the population of professional French farms. Rather than working directly with transition probabilities as in the traditional, discontinuous, MCM, this approach relies on the close but not identical concept of growth rate probabilities and exploits the Gibrat’s law of proportionate effects which appears to be supported by the French data. It is shown that the proposed continuous MCM is a more general approach, since it enables to derive more in-depth detail on the distribution of the projected population and the traditional MCM transition probability matrix can be easily reconstructed from the estimated growth rate probabilities. Though the continuous MCM is presented in this paper in a stationary framework, it should be possible to develop a non-stationary version in a similar way traditional MCMs are now made non-stationary.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 44269.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:44269

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Keywords: Farm size distribution; Gibrat’s law; Markov Chain Model; Farm Management;

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References

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  1. Karantininis, Kostas, 2002. "Information-based estimators for the non-stationary transition probability matrix: an application to the Danish pork industry," Journal of Econometrics, Elsevier, Elsevier, vol. 107(1-2), pages 275-290, March.
  2. Edwards, Clark & Smith, Matthew G. & Peterson, R. Neal, 1985. "The Changing Distribution of Farms by Size: A Markov Analysis," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, United States Department of Agriculture, Economic Research Service, issue 4.
  3. Jongeneel, Roelof A. & Slangen, Louis H.G., 2005. "Explaining the Changing Institutional Organisation of Dutch Farms: The Role of Farmer's Attitude, Advisory Network and Structural Factors," 94th Seminar, April 9-10, 2005, Ashford, UK, European Association of Agricultural Economists 24441, European Association of Agricultural Economists.
  4. repec:wop:minnas:9427 is not listed on IDEAS
  5. Tonini, Axel & Jongeneel, Roelof A., 2007. "Modelling the Dairy Farm Size Distribution in Poland Using an Instrumental Variable Generalized Cross Entropy Markov Approach," 104th Seminar, September 5-8, 2007, Budapest, Hungary 7784, European Association of Agricultural Economists.
  6. Jongeneel, Roelof A., 2002. "An Analysis of the Impact of Alternative EU Dairy Policies on the Size Distribution of Dutch Dairy Farms: an Information Based Approach to the Non-Stationary Markov Chain Model," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24892, European Association of Agricultural Economists.
  7. Christoph R. Weiss, 1999. "Farm Growth and Survival: Econometric Evidence for Individual Farms in Upper Austria," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(1), pages 103-116.
  8. Krenz, Ronald D., 1964. "Projection of Farm Numbers for North Dakota With Markov Chains," Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, United States Department of Agriculture, Economic Research Service, issue 3.
  9. Jongeneel, Roelof A. & Polman, Nico B.P. & Slangen, Louis H.G., 2005. "Explaining the Changing Institutional Organisation of Dutch Farms: The Role of Farmer's Attitude, Advisory Network and Structural Factors," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24526, European Association of Agricultural Economists.
  10. Stokes, Jeffrey R., 2006. "Entry, Exit, and Structural Change in Pennsylvania's Dairy Sector," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 35(2), October.
  11. Mike Massow & Alfons Weersink & Calum G. Turvey, 1992. "Dynamics of Structural Change in the Ontario Hog Industry," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 40(1), pages 93-107, 03.
  12. Rahelizatovo, Noro C. & Gillespie, Jeffrey M., 1999. "Dairy Farm Size, Entry, And Exit In A Declining Production Region," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, Southern Agricultural Economics Association, vol. 31(02), August.
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Cited by:
  1. Mikkel Bojesen & Hans Skov-Petersen & Morten Gylling, 2013. "Forecasting the potential of Danish biogas production: spatial representation of Markov chains," IFRO Working Paper 2013/16, University of Copenhagen, Department of Food and Resource Economics.
  2. Landi, Chiara & Stefani, Gianluca & Rocchi, Benedetto & Lombardi, Ginevra V. & Giampaolo, Sabina, 2013. "Determinants of Structural Change in the agricultural sector: An Empirical Analysis of Farm Exit in Tuscany," 2013 Second Congress, June 6-7, 2013, Parma, Italy, Italian Association of Agricultural and Applied Economics (AIEAA) 149893, Italian Association of Agricultural and Applied Economics (AIEAA).
  3. Zimmermann, Andrea & Heckelei, Thomas, 2012. "Differences of farm structural change across European regions," Discussion Papers, University of Bonn, Institute for Food and Resource Economics 162879, University of Bonn, Institute for Food and Resource Economics.

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