Drivers of Agricultural Physical Capital Development: Theoretical Framework and Hypotheses
This paper aims to identify drivers of physical capital adjustments in agriculture. It begins with a review of some of the most important theories and modelling approaches regarding firms’ adjustments of physical capital, ranging from output-based models to more recent approaches that consider irreversibility and uncertainty. Thereafter, it is suggested that determinants of physical capital adjustments in agriculture can be divided into three main groups, namely drivers related to: i)expected (risk-adjusted) profit, ii) expected societal benefits and costs and iii) expected private nonpecuniary benefits and costs. The discussion that follows focuses on the determinants belonging to the first group and covers aspects related to product market conditions, technological conditions, financial conditions and the role of firm structure and organization. Furthermore, the role of subjective beliefs is emphasized. The main part of this paper is concerned with the demand side of the physical capitalmarket and one section also briefly discusses some aspects related to supply of farm assets.
|Date of creation:||Feb 2012|
|Contact details of provider:|| Postal: Place du Congrès, B-1000 Bruxelles|
Phone: (+322) 229-39-11
Fax: (+322) 229-39-71
Web page: http://www.ceps.eu
More information through EDIRC
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.:
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, January.
- Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Stewart C. Myers & Nicholas S. Majluf, 1984. "Corporate Financing and Investment Decisions When Firms Have InformationThat Investors Do Not Have," NBER Working Papers 1396, National Bureau of Economic Research, Inc.
- Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
- William C. Brainard & James Tobin, 1968. "Pitfalls in Financial Model-Building," Cowles Foundation Discussion Papers 244, Cowles Foundation for Research in Economics, Yale University.
- Robert Ferber, 1967. "Determinants of Investment Behavior," NBER Books, National Bureau of Economic Research, Inc, number ferb67-1, November.
- Eisner, Robert, 1972. "Components of Capital Expenditures: Replacement and Modernization Versus Expansion," The Review of Economics and Statistics, MIT Press, vol. 54(3), pages 297-305, August.
- Balmann, Alfons & Odening, Martin & Weikard, Hans-Peter & Brandes, Wilhelm, 1996.
"Path-dependence without increasing returns to scale and network externalities,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 29(1), pages 159-172, January.
- Balmann, Alfons & Odening, Martin & Weikard, Hans-Peter & Brandes, Wilhelm, 1993. "Path-Dependence Without Increasing Returns To Scale And Network Externalities," Staff Papers 13402, University of Minnesota, Department of Applied Economics.
- Schiantarelli, Fabio, 1996. "Financial Constraints and Investment: Methodological Issues and International Evidence," Oxford Review of Economic Policy, Oxford University Press, vol. 12(2), pages 70-89, Summer.
- Robert McDonald & Daniel Siegel, 1986. "The Value of Waiting to Invest," The Quarterly Journal of Economics, Oxford University Press, vol. 101(4), pages 707-727.
- Swinnen, Johan F. M. & Gow, Hamish R., 1999. "Agricultural credit problems and policies during the transition to a market economy in Central and Eastern Europe," Food Policy, Elsevier, vol. 24(1), pages 21-47, February.
- Oliner, Stephen & Rudebusch, Glenn & Sichel, Daniel, 1995. "New and Old Models of Business Investment: A Comparison of Forecasting Performance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 27(3), pages 806-826, August.
- Stephen Oliner & Glenn Rudebusch & Daniel Sichel, 1993. "New and old models of business investment: a comparison of forecasting performance," Working Paper Series / Economic Activity Section 141, Board of Governors of the Federal Reserve System (U.S.).
- Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics,in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261 Elsevier.
- Odening, Martin & Mu[ss]hoff, Oliver & Hirschauer, Norbert & Balmann, Alfons, 2007. "Investment under uncertainty--Does competition matter?," Journal of Economic Dynamics and Control, Elsevier, vol. 31(3), pages 994-1014, March.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
- Wossink, Ada & Swinton, Scott M., 2007. "Jointness in production and farmers' willingness to supply non-marketed ecosystem services," Ecological Economics, Elsevier, vol. 64(2), pages 297-304, December.
- Edwards, William M. & Boehlje, Michael, 1980. "Machinery Selection Considering Timeliness Losses," Staff General Research Papers Archive 11065, Iowa State University, Department of Economics.
- Robert Ferber, 1967. "Introduction to "Determinants of Investment Behavior"," NBER Chapters,in: Determinants of Investment Behavior, pages 3-12 National Bureau of Economic Research, Inc.
- John V. Leahy, 1993. "Investment in Competitive Equilibrium: The Optimality of Myopic Behavior," The Quarterly Journal of Economics, Oxford University Press, vol. 108(4), pages 1105-1133.
- Nwaeze, Emeka T., 2005. "Replacement versus adaptation investments and equity value," Journal of Corporate Finance, Elsevier, vol. 11(3), pages 523-549, June.
- Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-1012, December.
- Cameron Short & Kangethe W. Gitu, 1991. "Timeliness Costs for Machinery Selection," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 39(3), pages 457-462, November. Full references (including those not matched with items on IDEAS)