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A dynamic dual model under state-contingent production uncertainty

Author

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  • Serra, Teresa
  • Stefanou, Spiro E.
  • Oude Lansink, Alfons G.J.M.

Abstract

In this paper we assess how production costs and capital accumulation patterns in agriculture have evolved over time, by paying special attention to the influence of risk. A dynamic state-contingent cost minimization approach is applied to assess production decisions in US agriculture over the last century. Results suggest the relevance of allowing for the stochastic nature of the production function which permits to capture both the differences in the costs of producing under different states of nature, the differences in the evolution of these costs over time, as well as the differential impacts of different states of nature on investment decisions.

Suggested Citation

  • Serra, Teresa & Stefanou, Spiro E. & Oude Lansink, Alfons G.J.M., 2010. "A dynamic dual model under state-contingent production uncertainty," 114th Seminar, April 15-16, 2010, Berlin, Germany 61353, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaa114:61353
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    File URL: http://purl.umn.edu/61353
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    References listed on IDEAS

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    1. C. J. O'Donnell & W. E. Griffiths, 2006. "Estimating State-Contingent Production Frontiers," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(1), pages 249-266.
    2. Yir-Hueih Luh & Spiro E. Stefanou, 1996. "Estimating Dynamic Dual Models under Nonstatic Expectations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(4), pages 991-1003.
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    Cited by:

    1. Céline Nauges & Christopher J. O'Donnell & John Quiggin, 2011. "Uncertainty and technical efficiency in Finnish agriculture: a state-contingent approach," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 38(4), pages 449-467, October.
    2. Theodoros Skevas & Teresa Serra, 2016. "The role of pest pressure in technical and environmental inefficiency analysis of Dutch arable farms: an event-specific data envelopment approach," Journal of Productivity Analysis, Springer, vol. 46(2), pages 139-153, December.
    3. D. Verreth & G. Emvalomatis & F. Bunte & A. Oude Lansink, 2015. "Dynamic and Static Behaviour with Respect to Energy Use and Investment of Dutch Greenhouse Firms," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 61(4), pages 595-614, August.
    4. Jesse B. Tack & Rulon D. Pope & Jeffrey T. LaFrance & Ricardo H. Cavazos, 2015. "Modelling an aggregate agricultural panel with application to US farm input demands," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 42(3), pages 371-396.
    5. Carpentier, Alain & Gohin, Alexandre & Sckokai, Paolo & Thomas, Alban, 2015. "Economic modelling of agricultural production: past advances and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 131-165, March.
    6. Moro, Daniele & Sckokai, Paolo, 2013. "The impact of decoupled payments on farm choices: Conceptual and methodological challenges," Food Policy, Elsevier, vol. 41(C), pages 28-38.
    7. Yang, Sansi & Shumway, C. Richard, 2015. "Asset Fixity under State-Contingent Production Uncertainty," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205256, Agricultural and Applied Economics Association;Western Agricultural Economics Association.
    8. Zein Kallas & Teresa Serra & José M. Gil, 2011. "Effects Of Policy Instruments On Farm Investments And Production Decisions In The Spanish Cop Sector," Post-Print hal-00712381, HAL.
    9. Sansi Yang & C. Richard Shumway, 2014. "Dynamic Adjustment in U.S. Agriculture under Climate Uncertainty," 2014 Papers pya413, Job Market Papers.

    More about this item

    Keywords

    risk; state-contingent; dynamic model; investment decisions; Agricultural and Food Policy; Farm Management; Land Economics/Use; D21;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory

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