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Discontinuous Policy and Distorted Choices: the Case of Acreage Control

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  • Weaver, Robert D.

Abstract

Past acreage response studies have failed to recognize that government control policies have typically introduced taxes and subsidies which are discontinuous over acreage planted. The nature of this discontinuity is reviewed and its impact on profit maximizing choice analyzed. A general model suitable for econometric estimation which would accommodate this discontinuity in policy is introduced. The effect of the discontinuity is to preclude ordinary least squares estimation. An extension of Tobin's maximum likelihood method is introduced to resolve the estimation complications.

Suggested Citation

  • Weaver, Robert D., 1978. "Discontinuous Policy and Distorted Choices: the Case of Acreage Control," Staff Paper Series 291354, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    • Handle: RePEc:ags:psusps:291354
    DOI: 10.22004/ag.econ.291354
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    Cited by:

    1. Weaver, Robert D. & Krainik, Amy, "undated". "Policy Control of Corn Acreage: A Re-examination," Staff Paper Series 256837, Pennsylvania State University, Department of Agricultural Economics and Rural Sociology.
    2. Meeder, Robert C., 1981. "Celery A Derived Demand Model," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279327, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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