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A Fully Calibrated Generalized Constant‐Elasticity‐of‐Substitution Programming Model of Agricultural Supply
Author(s) -
Mérel Pierre,
Simon Leo K.,
Yi Fujin
Publication year - 2011
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1093/ajae/aar029
Subject(s) - constant elasticity of substitution , replicate , substitution (logic) , calibration , constant (computer programming) , elasticity (physics) , quadratic equation , mathematical optimization , computer science , econometrics , economics , elasticity of substitution , production (economics) , mathematics , microeconomics , statistics , composite material , materials science , geometry , programming language
This article provides a methodology to exactly calibrate land‐constrained programming models of agricultural supply against supply elasticities using generalized constant‐elasticity‐of‐substitution, crop‐specific production functions. We formally derive the necessary and sufficient conditions under which the model can replicate a reference allocation while displaying crop supply responses consistent with exogenous information on supply elasticities. When it exists, the solution to the exact calibration problem is unique. Subject to a caveat, the proposed specification is shown to be more flexible with respect to calibration than the quadratic specification that has been used extensively in policy models based on positive mathematical programming.