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Demand for Farm Output in a Complete System of Demand Functions

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  • Michael K. Wohlgenant

Abstract

Demand interrelationships for farm outputs that are theoretically consistent with consumer demand and marketing group behavior provide important linkages between retail and farm prices. A conceptual model, based on reduced-form specifications for retail and farm prices, is formulated and applied empirically to a set of eight disaggregated food commodities. This approach circumvents the need for retail quantities, which are frequently unavailable for disaggregated food commodities. The results are consistent with theory and generally indicate significant substitution between farm and marketing inputs. Except for poultry, derived demand elasticities are at least 40% larger compared to those derived assuming fixed proportions.

Suggested Citation

  • Michael K. Wohlgenant, 1989. "Demand for Farm Output in a Complete System of Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 241-252.
  • Handle: RePEc:oup:ajagec:v:71:y:1989:i:2:p:241-252.
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    File URL: http://hdl.handle.net/10.2307/1241581
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    Cited by:

    1. Anthony N. Rezitis, 2018. "Empirical analysis of price relations along the Finnish supply chain of selected meat, dairy, and egg products: A dynamic panel data approach," Agribusiness, John Wiley & Sons, Ltd., vol. 34(3), pages 542-561, June.
    2. Pinar Celikkol & Spiro Stefanou, 1999. "Measuring the Impact of Price-Induced Innovation on Technological Progress: Application to the U.S. Food Processing and Distribution Sector," Journal of Productivity Analysis, Springer, vol. 12(2), pages 135-151, September.
    3. Hertel, Thomas W., 1991. "Applied General Equilibrium Analysis of Agricultural Policies," Staff Papers 200396, Purdue University, Department of Agricultural Economics.
    4. Chin-Hwa Jenny Sun & Fu-Sung Chiang & Dale Squires, 2017. "More Landings for Higher Profit? Inverse Demand Analysis of the Bluefin Tuna Auction Price in Japan and Economic Incentives in Global Bluefin Tuna Fisheries Management," Working Papers 1701, Institute of Applied Economics, National Taiwan Ocean University, Taiwan, revised Aug 2017.
    5. Eales, James S. & Unnevehr, Laurian J., 1994. "The inverse almost ideal demand system," European Economic Review, Elsevier, vol. 38(1), pages 101-115, January.
    6. Martinez, Steve & Zering, Kelly, 1997. "Vertical Coordination and Consumer Welfare: The Case of the Pork Industry," Agricultural Economics Reports 262048, United States Department of Agriculture, Economic Research Service.
    7. Liu, X., 2018. "Export Tax Rebate Policy in Chinese Fishery Sector: Who are the Beneficiaries?," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 277454, International Association of Agricultural Economists.
    8. Sexton, Richard J., 1991. "Game Theory: A Review With Applications To Vertical Control In Agricultural Markets," Working Papers 225865, University of California, Davis, Department of Agricultural and Resource Economics.
    9. Dimitrios Panagiotou & Athanassios Stavrakoudis, 2017. "A Stochastic Production Frontier Estimator of the Degree of Oligopsony Power in the U.S. Cattle Industry," Journal of Industry, Competition and Trade, Springer, vol. 17(1), pages 121-133, March.
    10. Ferrier, Peyton M & Rucker, Randal R. & Thurman, Walter N. & Burgett, Michael, 2018. "Economic Effects and Responses to Changes in Honey Bee Health," Economic Research Report 276245, United States Department of Agriculture, Economic Research Service.
    11. Parker, Douglas D. & Zilberman, David, 1990. "Price Transmission Across Marketing Levels In A Hedonic Framework," 1990 Annual meeting, August 5-8, Vancouver, Canada 270982, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. S. McCorriston & C. W. Morgan & A. J. Rayner, 1998. "Processing Technology, Market Power and Price Transmission," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 185-201, June.
    13. Chen, Yuquan & Yu, Xiaohua, 2018. "Does the centralized slaughtering policy create market power for pork industry in China?," China Economic Review, Elsevier, vol. 50(C), pages 59-71.
    14. Grau, Aaron Stephan Alexander & Hockmann, Heinrich, 2017. "Estimating oligopsony power on two vertically integrated markets," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 261277, European Association of Agricultural Economists.
    15. Blisard, Noel & Blayney, Donald P. & Chandran, Ram & Allshouse, Jane E., 1999. "Analyses of Generic Dairy Advertising, 1984-97," Technical Bulletins 33554, United States Department of Agriculture, Economic Research Service.
    16. Daniele CAVICCHIOLI, 2013. "Detecting market power along food supply chains: evidence from the fluid milk sector in Italy," Departmental Working Papers 2013-01, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano, revised 30 Jan 2013.
    17. Daniele Cavicchioli, 2018. "Detecting Market Power Along Food Supply Chains: Evidence and Methodological Insights from the Fluid Milk Sector in Italy," Agriculture, MDPI, Open Access Journal, vol. 8(12), pages 1-22, December.
    18. Henry W. Kinnucan & Maria Thomas, 1997. "Optimal Media Allocation Decisions For Generic Advertisers," Journal of Agricultural Economics, Wiley Blackwell, vol. 48(1‐3), pages 425-441, January.
    19. Tim Lloyd, 2017. "Forty Years of Price Transmission Research in the Food Industry: Insights, Challenges and Prospects," Journal of Agricultural Economics, Wiley Blackwell, vol. 68(1), pages 3-21, February.
    20. Lin, Ying & Zhang, Daowei, 2017. "Incidence of Russian log export tax: A vertical log-lumber model," Journal of Forest Economics, Elsevier, vol. 29(PB), pages 69-77.
    21. Chin-Hwa Jenny Sun & Fu-Sung Chiang & Dale Squires & Anthony Rogers & Man-Ser Jan, 2018. "More Landings for Higher Profit? Inverse Demand Analysis of the Bluefin Tuna Auction Price in Japan and Economic Incentives in Global Bluefin Tuna Fisheries Management," Working Papers 1901, Institute of Applied Economics, National Taiwan Ocean University, Taiwan, revised Jan 2019.

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