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Modeling Supply Response in a Multiproduct Framework

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  • V. Eldon Ball

Abstract

The paper models multiproduct supply response in agriculture and tests key assumptions traditionally maintained in supply response studies. The technology is approximated by a restricted profit function. The properties of the restricted profit function are imposed during estimation. The hypothesis that maintains the existence of output price and quantity indexes that satisfy the adding-up property is rejected. The existence of individual production functions for each output is also rejected. Unless joint production is permitted, the estimates of responsiveness of a particular commodity to changes in own price or prices of competing outputs are likely to be considerably understated.

Suggested Citation

  • 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.
  • Handle: RePEc:oup:ajagec:v:70:y:1988:i:4:p:813-825.
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    File URL: http://hdl.handle.net/10.2307/1241922
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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. Shumway, C. Richard & Davis, George C., 2001. "Does consistent aggregation really matter?," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 45(2), pages 1-34.
    3. Hertel, Thomas W., 1991. "Applied General Equilibrium Analysis of Agricultural Policies," Staff Papers 200396, Purdue University, Department of Agricultural Economics.
    4. Ali Ferjani & Albert Zimmermann, 2013. "Estimating Agricultural Supply Response with the dynamic sectormodel SILAS-dyn," Journal of Socio-Economics in Agriculture (Until 2015: Yearbook of Socioeconomics in Agriculture), Swiss Society for Agricultural Economics and Rural Sociology, vol. 6(1), pages 155-176.
    5. Chatura Sewwandi Wijetunga, 2016. "Rice production structures in Sri Lanka: The normalized translog profit function approach," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 6(2), pages 21-35, February.
    6. Colby, Hunter & Diao, Xinshen & Somwaru, Agapi, 2000. "Cross-Commodity Analysis of China's Grain Sector: Sources of Growth and Supply Response," Technical Bulletins 33565, United States Department of Agriculture, Economic Research Service.
    7. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    8. 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.
    9. Vasavada, Utpal & Ball, V. Eldon, 1988. "Modeling Dynamic Adjustment In A Multi-Output Framework," Staff Reports 278021, United States Department of Agriculture, Economic Research Service.
    10. Asunka, Samuel & Shumway, C. Richard, 1996. "Allocatable Fixed Inputs And Jointness In Agricultural Production: More Implications," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), pages 1-6, October.
    11. 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).
    12. Fernandez-Cornejo, Jorge, 1996. "The Microeconomic Impact Of Ipm Adoption: Theory And Application," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 25(2), pages 1-12, October.
    13. 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.
    14. Giannis Karagiannis & George Mergos, 2000. "Total Factor Productivity Growth and Technical Change in a Profit Function Framework," Journal of Productivity Analysis, Springer, vol. 14(1), pages 31-51, July.
    15. 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.
    16. Hansen, James Mark, 2000. "Agricultural and trade policy reform in Mexico: PROCAMPO, NAFTA, and pre-GATT," ISU General Staff Papers 2000010108000014902, Iowa State University, Department of Economics.
    17. Colby, Hunter & Diao, Xinshen & Somwaru, Agapi, 1999. "Sources Of Growth And Supply Response: A Cross-Commodity Analysis Of China'S Grain Sector," Bulletins 12985, University of Minnesota, Economic Development Center.
    18. Qinghua Liu & C. Richard Shumway, 2004. "Testing aggregation consistency across geography and commodities," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(3), pages 463-486, September.
    19. Miljkovic, Dragan & Ripplinger, David & Shaik, Saleem, 2016. "Impact of biofuel policies on the use of land and energy in U.S. agriculture," Journal of Policy Modeling, Elsevier, vol. 38(6), pages 1089-1098.
    20. Perekhozhuk, Oleksandr, 2007. "Marktstruktur und Preisbildung auf dem ukrainischen Markt für Rohmilch," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 41, number 92322.
    21. 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).
    22. Gopinath, Munisamy & Roe, Terry L., 1999. "Modeling inter-sectoral growth linkages: An application to U.S. agriculture," Agricultural Economics, Blackwell, vol. 21(2), pages 131-144, October.
    23. 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.
    24. Liapis, Peter S. & Krissoff, Barry & Neff, Liana, 1992. "Modeling Preferential .Trading Arrangements for the Agricultural Sector: A U.S.-Mexico Example," Staff Reports 278631, United States Department of Agriculture, Economic Research Service.

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