Success in Maximizing Profits and Reasons for Profit Deviation on Dairy Farms
The Weak Axiom of Profit Maximization (WAPM) was used to test how successful each of 70 individual New York State dairy farms was in maximizing profits using nine years of data. The netput vectors were corrected for technological change using nonparametric indices that do not require the assumption of profit maximization nor any functional form for the underlying technology. These technology indices are consistent with the nonparametric assumptions used in the WAPM tests. The average negative WAPM deviation over the 70 farms was .20, indicating that on average these farms could have selected available netput vectors that would have increased profits by 20 percent of total receipts. A tobit regression showed that the available characteristics on these farms explained very little of the variability in their abilities to select the best netput vectors. Yet, increased age and additional education increased the ability to select the best netput vector. -
|Date of creation:||Apr 1997|
|Date of revision:|
|Contact details of provider:|| Postal: Warren Hall, Ithaca NY 14853|
Web page: http://aem.cornell.edu/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Treadway, Arthur B., 1970. "Adjustment costs and variable inputs in the theory of the competitive firm," Journal of Economic Theory, Elsevier, vol. 2(4), pages 329-347, December.
- Varian, Hal R., 1990. "Goodness-of-fit in optimizing models," Journal of Econometrics, Elsevier, vol. 46(1-2), pages 125-140.
- Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
- Chris Fawson & C. Richard Shumway, 1988. "A Nonparametric Investigation of Agricultural Production Behavior for U.S. Subregions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(2), pages 311-317.
- Batra, Raveendra N & Ullah, Aman, 1974. "Competitive Firm and the Theory of Input Demand under Price Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 537-48, May/June.
- Featherstone, Allen M. & Moghnieh, Ghassan A. & Goodwin, Barry K., 1995.
"Farm-level nonparametric analysis of cost-minimization and profit-maximization behavior,"
Agricultural Economics of Agricultural Economists,
International Association of Agricultural Economists, vol. 13(2), November.
- Featherstone, Allen M. & Moghnieh, Ghassan A. & Goodwin, Barry K., 1995. "Farm-level nonparametric analysis of cost-minimization and profit-maximization behavior," Agricultural Economics, Blackwell, vol. 13(2), pages 109-117, November.
- Afriat, Sidney N, 1972. "Efficiency Estimation of Production Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 13(3), pages 568-98, October.
- Simon, Herbert A., 1984. "On the behavioral and rational foundations of economic dynamics," Journal of Economic Behavior & Organization, Elsevier, vol. 5(1), pages 35-55, March.
- Tauer, Loren W., 1994. "Do New York Dairy Farmers Maximize Profits?," Staff Papers 121318, Cornell University, Department of Applied Economics and Management.
When requesting a correction, please mention this item's handle: RePEc:ags:cudawp:127827. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)
If references are entirely missing, you can add them using this form.