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Linear Programming versus Positively Estimated Supply Functions: An Empirical and Methodological Critique

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  • C. Richard Shumway
  • Anne A. Chang

Abstract

This paper examines whether supply relations derived from a static profit-maximizing linear programming model can be used as information to explain supply response with at least the same reliability as partial adjustment regression models. Programming estimates of direct supply elasticities of California commodities are compared with estimates from time-series regressions. Differences on individual crops are considerable, but on average the elasticity estimates are comparable. Programming parameters are combined with time-series data to test whether imposing such relative parameters on time-series models need not significantly reduce their predictive ability. This imposition does not reduce predictive ability or significantly improve it.

Suggested Citation

  • C. Richard Shumway & Anne A. Chang, 1977. "Linear Programming versus Positively Estimated Supply Functions: An Empirical and Methodological Critique," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 59(2), pages 344-357.
    • Handle: RePEc:oup:ajagec:v:59:y:1977:i:2:p:344-357.
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    Citations

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    Cited by:

    1. Liu, Karen, 1981. "Multiple Crop Supply and Factor Demand Component of the World Grains, Oilseeds, and Livestock Model," Staff Reports 276718, United States Department of Agriculture, Economic Research Service.
    2. Amina Al Naabi & Shekar Bose, 2020. "Do Regulatory Measures Necessarily Affect Oman’s Seafood Export-Supply?," SAGE Open, , vol. 10(3), pages 21582440209, August.
    3. Howitt, Richard E. & Mean, Phillippe, 1983. "A Positive Approach to Microeconomic Programming Models," Working Papers 225710, University of California, Davis, Department of Agricultural and Resource Economics.
    4. Phillips, Mark & Hueth, Darrell L. & Just, Richard E., 1989. "Estimating Cost of Banning Agricultural Chemicals: The Case of Maneb and Maneb Alternatives," Working Papers 197631, University of Maryland, Department of Agricultural and Resource Economics.
    5. Shumway, C. Richard & Talpaz, Hovav, 1977. "Verification of Linear Programming Solutions, with Emphasis on Supply Implications," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 9(2), pages 1-8, December.
    6. Shumway, C. Richard & Green, Robert C., 1982. "Joint Estimation of U.S. Field Crop Supply Functions," Departmental Reports 256826, Texas A&M University, Department of Agricultural Economics.
    7. Hall, Nigel H. & Menz, Kenneth M., 1985. "Product Supply Elasticities for the Australian Broadacre Industries, Estimated with a Programming Model," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 53(01), pages 1-8, April.
    8. Phoebe Koundouri, 2004. "Current Issues in the Economics of Groundwater Resource Management," Journal of Economic Surveys, Wiley Blackwell, vol. 18(5), pages 703-740, December.
    9. Shumway, C. Richard & Gebremeskel, Tesfaye, 1978. "Impact of Risk Averse Behavior on Fertilizer Demand for Tame Forages," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 10(1), pages 51-57, July.
    10. K. Jegasothy & C. R. Shumway & H. Lim, 1990. "Production Technology And Input Allocations In Sri Lankan Multicrop Farming," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(1), pages 33-46, January.
    11. Colman, David R., 1983. "A Review of the Arts of Supply Response Analysis," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 51(03), pages 1-30, December.
    12. Batterham, Robert L. & MacAulay, T. Gordon, 1994. "Price-Linked Farm And Spatial Equilibrium Models," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 38(2), pages 1-28, August.
    13. Wicks, John A. & Dillon, John L., 1978. "APMAA Estimates of Supply Elasticities for Australian Wool, Beef and Wheat," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 46(01), pages 1-10, April.
    14. A. P. Moxey & B. White & R. A. Sanderson & S. P. Rushton, 1995. "An Approach To Linking An Ecological Vegetation Model To An Agricultural Economic Model," Journal of Agricultural Economics, Wiley Blackwell, vol. 46(3), pages 381-397, September.
    15. Rowse, John, 1980. "1. On User Solution Strategy for Mixed-Integer Linear Programming Models 2. On the Solution of Spatial Price and Allocation Models," Queen's Institute for Economic Research Discussion Papers 275172, Queen's University - Department of Economics.

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