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Cap reform: modelling supply response subject to the land set-aside

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  • Ball, V. Eldon
  • Bureau, Jean-Christophe
  • Eakin, Kelly
  • Somwaru, Agapi

Abstract

This paper uses duality theory to develop a model of European Community agriculture. The model is used to investigate the impact of the land set-aside provision of the recent package of reforms of the Common Agricultural Policy. We assume that producers chose output and variable input levels that maximize difference between revenue and variable cost. By including first-order conditions for the allocation of land across its uses, we impose that the observed allocations are profit-maximizing allocations. To overcome the problem of incorporating many outputs into an estimable production structure, we imposed a priori the restriction that the technology was weakly separable in major categories of outputs. With this restriction, it was possible to model production decisions in stages using consistent aggregates in the latter stages.
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  • Ball, V. Eldon & Bureau, Jean-Christophe & Eakin, Kelly & Somwaru, Agapi, 1997. "Cap reform: modelling supply response subject to the land set-aside," Agricultural Economics, Blackwell, vol. 17(2-3), pages 277-288, December.
  • Handle: RePEc:eee:agecon:v:17:y:1997:i:2-3:p:277-288
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    References listed on IDEAS

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    1. V. Eldon Ball, 1988. "Modeling Supply Response in a Multiproduct Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 813-825.
    2. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    3. V.E. Ball & J.C. Bureau & J.P. Butault & H.P. Witzke, 1993. "The stock of capital in European Community agriculture," Post-Print hal-01072680, HAL.
    4. Berndt, Ernst R & Savin, N Eugene, 1975. "Estimation and Hypothesis Testing in Singular Equation Systems with Autoregressive Disturbances," Econometrica, Econometric Society, vol. 43(5-6), pages 937-957, Sept.-Nov.
    5. Ball, V Eldon, et al, 1993. "The Stock of Capital in European Community Agriculture," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 20(4), pages 437-450.
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    Cited by:

    1. Arnade, Carlos Anthony & Kelch, David R. & Leetmaa, Susan E., 2002. "Supply Response In France, Germany, And The Uk: Technology And Price," 2002 Annual meeting, July 28-31, Long Beach, CA 19702, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Stéphane Blancard & Jean-Philippe Boussemart & Walter Briec & Kristiaan Kerstens, 2006. "Short- and Long-Run Credit Constraints in French Agriculture: A Directional Distance Function Framework Using Expenditure-Constrained Profit Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 351-364.
    3. V. Ball & Jean-Christophe Bureau & Jean-Pierre Butault & Richard Nehring, 2001. "Levels of Farm Sector Productivity: An International Comparison," Journal of Productivity Analysis, Springer, vol. 15(1), pages 5-29, January.
    4. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "Farm-level economic impacts of EU-CAP greening measures," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205309, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    5. Sckokai, Paolo, 2001. "The Common Agricultural Policy In Econometric Models," Working Papers 14800, National Institute of Agricultural Economics, Italy INEA, Osservatorio Sulle Politiche Agricole dell'UE.
    6. Louhichi, Kamel & Ciaian, Pavel & Espinosa, Maria & Colen, Liesbeth & Perni, Angel & Gomez y Paloma, Sergio, 2015. "EU-wide individual Farm Model for CAP Analysis (IFM-CAP): Application to Crop Diversification Policy," 2015 Conference, August 9-14, 2015, Milan, Italy 212155, International Association of Agricultural Economists.
    7. Ball, V. Eldon & Moss, Charles B. & Erickson, Kenneth W. & Nehring, Richard F., 2003. "Modeling Supply Response In A Multiproduct Framework Revisited: The Nexus Of Empirics And Economics," 2003 Annual meeting, July 27-30, Montreal, Canada 21981, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Fezzi, Carlo & Bateman, Ian J., 2009. "Structural Agricultural Land Use Modelling," 2009 Conference, August 16-22, 2009, Beijing, China 51423, International Association of Agricultural Economists.

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