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Estimating Supply Response in the Presence of Farm Programs

Author

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  • David R. Lee
  • Peter G. Helmberger

Abstract

Previous empirical research on crop supply response has given insufficient attention to the fundamentally different nature of supply response under farm programs versus competitive markets. A simple theoretical model is presented which highlights the program participation option in the farmer's acreage allocation decision. The model also provides the basis for different expected supply elasticities under "free market" and "farm program" regimes for corn and soybeans. Econometric supply estimation for Corn Belt states for 1948–80 using a temporally disaggregated approach confirms a greater supply elasticity for corn and a lower supply elasticity for soybeans under acreage-restricting feed grain programs.

Suggested Citation

  • David R. Lee & Peter G. Helmberger, 1985. "Estimating Supply Response in the Presence of Farm Programs," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(2), pages 193-203.
  • Handle: RePEc:oup:ajagec:v:67:y:1985:i:2:p:193-203.
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    File URL: http://hdl.handle.net/10.2307/1240670
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    Citations

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    Cited by:

    1. Torre Ugarte, Daniel de la & Sanford, Scott & Skinner, Robert A. & Westcott, Paul C. & Lin, William W., 2000. "Supply Response Under The 1996 Farm Act And Implications For The U.S. Field Crops Sector," Technical Bulletins 33568, United States Department of Agriculture, Economic Research Service.
    2. Sergio H. Lence & Dermot J. Hayes, 2002. "U.S. Farm Policy and the Volatility of Commodity Prices and Farm Revenues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 335-351.
    3. Hertel, Thomas W., 1991. "Applied General Equilibrium Analysis of Agricultural Policies," Staff Papers 200396, Purdue University, Department of Agricultural Economics.
    4. Kivanda, Lena & Fox, Glenn, 1993. "Falsification and the Practice of Agricultural Production Economists: A Methodological Assessment," Department of Agricultural Economics and Business 258724, University of Guelph.
    5. Tsigas, Marinos E. & Hertel, Thomas W. & Preckel, Paul V., 1990. "Modeling The U.S. Grains Programs: A Microeconomic Approach," 1990 Annual meeting, August 5-8, Vancouver, Canada 270990, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. D. Roberts & J. Froud & R. W. Fraser, 1996. "Participation In Set Aside: What Determines The Opting In Price?," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1-4), pages 89-98.
    7. Foster, William E. & Babcock, Bruce A., 1993. "Commodity Policy, Price Incentives, and the Growth in Per-Acre Yields," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 25(01), pages 253-265, July.
    8. repec:ags:gewipr:261496 is not listed on IDEAS
    9. Kanlaya J. Barr & Bruce A. Babcock & Miguel A. Carriquiry & Andre M. Nassar & Leila Harfuch, 2011. "Agricultural Land Elasticities in the United States and Brazil," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 33(3), pages 449-462.
    10. Jeon, Jong-Pyeong, 1989. "The impacts of policy alternatives and foreign demand fluctuations on the US rice market," ISU General Staff Papers 1989010108000010204, Iowa State University, Department of Economics.
    11. Schoney, R. A., 1990. "An Analysis of Wheat Supply Response Under Risk and Uncertainty," Working Papers 244030, Agriculture and Agri-Food Canada.
    12. Ramsey, Steven M. & Bergtold, Jason S. & Heier Stamm, Jessica, 2018. "An Artificial Neural Network Approach to Acreage-Share Modeling," 2018 Annual Meeting, August 5-7, Washington, D.C. 274395, Agricultural and Applied Economics Association.
    13. Tsai, Grace Yueh-Hsiang, 1989. "A dynamic model of the U.S. cotton market with rational expectations," ISU General Staff Papers 1989010108000012168, Iowa State University, Department of Economics.
    14. Sergio H. Lence & Dermot J. Hayes, 2002. "U.S. Farm Policy and the Volatility of Commodity Prices and Farm Revenues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 335-351.
    15. Hyunseok Kim & GianCarlo Moschini, 2018. "The Dynamics of Supply: U.S. Corn and Soybeans in the Biofuel Era," Center for Agricultural and Rural Development (CARD) Publications 18-wp579, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    16. Love, H. Alan & Rausser, Gordon C., 1988. "Oregon State University: the case of the United States wheat sector," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7bk6g61f, Department of Agricultural & Resource Economics, UC Berkeley.
    17. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.

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