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Shadow vs. market prices in explaining land allocation: Subsistence maize cultivation in rural Mexico

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  • Arslan, AslIhan

Abstract

Prices may fail to explain farmers' land allocation if the relevant decision prices are "shadow prices" that deviate from market prices. This may be the case for farmers who attach significant non-market values to their crops. I theoretically explain why land allocation may not respond to market signals even if transaction costs are not binding. I use nationally representative rural household data from Mexico to show that shadow prices better explain the land subsistence farmers allocate to traditional maize in this center of maize diversity. I discuss the importance of non-market values in understanding supply response and on-farm conservation of traditional crops.

Suggested Citation

  • Arslan, AslIhan, 2011. "Shadow vs. market prices in explaining land allocation: Subsistence maize cultivation in rural Mexico," Food Policy, Elsevier, vol. 36(5), pages 605-613, October.
  • Handle: RePEc:eee:jfpoli:v:36:y:2011:i:5:p:605-613
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    Cited by:

    1. repec:spr:jqecon:v:15:y:2017:i:3:d:10.1007_s40953-016-0058-z is not listed on IDEAS
    2. Parisa Aghajanzadeh-Darzi & Pierre-Alain Jayet & Athanasios Petsakos, 2017. "Improvement of a Bio-Economic Mathematical Programming Model in the Case of On-Farm Source Inputs and Outputs," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(3), pages 489-508, September.

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