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Economies of Density versus Natural Advantage: Crop Choice on the Back Forty

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  • Thomas J. Holmes

    (University of Minnesota, Federal Reserve Bank of Minneapolis, and NBER)

  • Sanghoon Lee

    (Sauder School of Business, University of British Columbia)

Abstract

We estimate the factors determining specialization of crop choice at the level of individual fields, distinguishing between the role of natural advantage (soil characteristics) and economies of density (scale economies achieved when farmers plant neighboring fields the same). Using rich geographic data from North Dakota, including new data on crop choice collected by satellite, we estimate a model of how a farmer plants adjacent fields under the farmer's control. We find planting decisions on a field are heavily dependent on the soil characteristics of adjacent fields. Through this relationship, we back out the structural parameters of economies of density. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Thomas J. Holmes & Sanghoon Lee, 2012. "Economies of Density versus Natural Advantage: Crop Choice on the Back Forty," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 1-19, February.
  • Handle: RePEc:tpr:restat:v:94:y:2012:i:1:p:1-19
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    Cited by:

    1. William R. Kerr & Scott Duke Kominers, 2015. "Agglomerative Forces and Cluster Shapes," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 877-899, October.
    2. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, Elsevier.
    3. Gary D. Libecap & Dean Lueck, 2009. "The Demarcation of Land and the Role of Coordinating Institutions," NBER Working Papers 14942, National Bureau of Economic Research, Inc.
    4. Gibbons, Steve & Overman, Henry G. & Patacchini, Eleonora, 2015. "Spatial Methods," Handbook of Regional and Urban Economics, Elsevier.
    5. McFadden, Jonathan R., 2015. "Essays on climate change adaptation and biotechnologies in U.S. agriculture," ISU General Staff Papers 201501010800005635, Iowa State University, Department of Economics.
    6. Thomas J. Holmes & Sanghoon Lee, 2010. "Cities as Six-by-Six-Mile Squares: Zipf's Law?," NBER Chapters,in: Agglomeration Economics, pages 105-131 National Bureau of Economic Research, Inc.
    7. Stephen J. Redding, 2010. "The Empirics Of New Economic Geography," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 297-311.
    8. Edward L. Glaeser & Sari Pekkala Kerr & William R. Kerr, 2015. "Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines," The Review of Economics and Statistics, MIT Press, vol. 97(2), pages 498-520, May.
    9. Raghuram Rajan & Rodney Ramcharan, 2015. "The Anatomy of a Credit Crisis: The Boom and Bust in Farm Land Prices in the United States in the 1920s," American Economic Review, American Economic Association, vol. 105(4), pages 1439-1477, April.
    10. Dave Donaldson & Adam Storeygard, 2016. "The View from Above: Applications of Satellite Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 30(4), pages 171-198, Fall.
    11. Redding, Stephen, 2009. "Economic geography: a review of the theoretical and empirical literature," LSE Research Online Documents on Economics 25500, London School of Economics and Political Science, LSE Library.
    12. Gary D. Libecap & Dean Lueck, 2009. "The Demarcation of Land and the Role of Coordinating Institutions," ICER Working Papers 14-2009, ICER - International Centre for Economic Research.
    13. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    14. Ramcharan Rodney, 2010. "The Link between the Economic Structure and Financial Development," The B.E. Journal of Macroeconomics, De Gruyter, vol. 10(1), pages 1-37, May.
    15. Edward L. Glaeser & William R. Kerr & Giacomo A. M. Ponzetto, 2010. "Clusters of Entrepreneurship," NBER Chapters,in: Cities and Entrepreneurship National Bureau of Economic Research, Inc.
    16. repec:nbr:nberch:13941 is not listed on IDEAS
    17. Hoyt Bleakley & Jeffrey Lin, 2012. "Portage and Path Dependence," The Quarterly Journal of Economics, Oxford University Press, vol. 127(2), pages 587-644.
    18. Benjamin Bridgman & Michael Maio & James A. Schmitz, 2012. "What ever happened to the Puerto Rican sugar manufacturing industry?," Staff Report 477, Federal Reserve Bank of Minneapolis.
    19. Marcelo Olivares & Gabriel Y. Weintraub & Rafael Epstein & Daniel Yung, 2012. "Combinatorial Auctions for Procurement: An Empirical Study of the Chilean School Meals Auction," Management Science, INFORMS, vol. 58(8), pages 1458-1481, August.
    20. Diego Restuccia & Tasso Adamopoulos, 2017. "Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data," 2017 Meeting Papers 1180, Society for Economic Dynamics.
    21. Diego Restuccia & Tasso Adamopoulos, 2017. "Geography and Agricultural Productivity: Cross-Country Evidence from Micro Plot-Level Data," 2017 Meeting Papers 1180, Society for Economic Dynamics.
    22. Fertő, Imre & Csonka, Arnold, 2017. "Válság- és agglomerációs hatások a magyarországi sertéstartásban
      [Crisis and agglomeration in Hungary s pig production]
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 105-122.
    23. Ager, Philipp & Hansen, Casper Worm & Lønstrup, Lars, 2018. "Shaking Up the Equilibrium: Natural Disasters, Economic Activity, and Immigration," Discussion Papers of Business and Economics 2/2018, University of Southern Denmark, Department of Business and Economics.

    More about this item

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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