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Estimating Ex Ante Cost Functions for Stochastic Technologies
Author(s) -
Chambers Robert G.,
Serra Teresa
Publication year - 2019
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/aay068
Subject(s) - ex ante , economics , econometric model , function (biology) , econometrics , mathematical economics , macroeconomics , evolutionary biology , biology
This paper revisits the problem of estimating ex ante cost functions previously studied by Pope and Just in 1996, as well as Moschini in 2001. An ex ante cost function that generalizes their ex ante cost functions is introduced, and an econometric procedure for estimating a flexible approximation to it is developed. That generalized cost function is economically relevant not only for the Pope and Just 1996 choice setting, but for general producer risk preferences, general stochastic technologies, and general forms of price uncertainty. An econometric strategy for estimating the resulting cost structure that adapts Moschini's 2001 “full‐information” approach is developed, followed by an econometric application to U.S. agriculture.