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On the estimation of supply and demand elasticities of agricultural commodites

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  • Santeramo, Fabio Gaetano

Abstract

This AGRODEP Technical Note provides a literature review on the topic of estimation of demand and supply elasticities. To this end, it starts the discussion by summarizing the main facets of production theory and consumer theory to introduce the concept of elasticities, with examples of di fferent types of elasticities most utilized in the literature. Next, it discusses the identi fication problem in estimating elasticities, i.e. the issue of having to solve for unique values of the parameters of the structural model from the values of the parameters of the reduced form of the model. It summarizes various methodologies employed in the literature to solve this problem and gives practical examples. These solutions include, but are not limited to, using instrumental variables, adopting a recursive structure, holding demand constant, and imposing inequality constraints in order to restrict the domain of estimates.

Suggested Citation

  • Santeramo, Fabio Gaetano, 2014. "On the estimation of supply and demand elasticities of agricultural commodites," AGRODEP technical notes TN-10, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:fpr:agrotn:tn-10
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    Cited by:

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    3. Lamonaca, Emilia & Santeramo, Fabio Gaetano & Seccia, Antonio, 2021. "Climate changes and new productive dynamics in the global wine sector," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 10(2), April.

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    More about this item

    Keywords

    Economic models; trade; consume theory; Elasticities; producer theory;
    All these keywords.

    JEL classification:

    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets

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