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Statistical Analysis of Supply Response in Late Spring Potatoes in California
Author(s) -
Mundlak Yair,
McCorkle Chester O.
Publication year - 1956
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 - 10.2307/1234398
Subject(s) - spring (device) , statistical analysis , geography , environmental science , statistics , engineering , mathematics , mechanical engineering
THIS paper specifies, and attempts to quantify, the major economic determinants of the supply of late spring potatoes in California. Interest in this problem arises from two sources. (1) Supplies and prices of late spring potatoes in California have fluctuated widely in recent years, with prices declining to levels approximating harvesting costs during years of relatively large acreage. (2) Late spring potatoes are one of several alternative cash crops that farmers in the southern San Joaquin Valley of California can produce. The empirical findings pertain to a limited geographic area, but the method of approach-and particularly possible applications of the results-are thought to be of broader interest, The concept of supply response has been introduced to express average relationships, over the period studied (1929-1953), between the supply of late spring potatoes and the specified variables that are thought to determine that supply in large part. Regression techniques are used to estimate the relationships between late spring potato acreage and selected variables. Possible uses for the estimated parameters are demonstrated (1) as prediction mechanisms, and (2) as a basis for acreage (and supply) regulation through the establishment of a price system with given intercommodity price relationships. The second application of the findings of this study is presented in the form of isoacreage maps, with prices serving as coordinates. Alternative approaches to statistical treatment of supply response are considered briefly. The use of cross sectional data and time series within either one of two general frameworks is discussed. Empirical analysis is confined to time series of one equation drawn from a general model of the late spring potato industry. The factors affecting supply are divided into those affecting yield and those affecting acreage. The acreage equation is viewed as the aggregate result of the planning of individual late spring potato producers. Both the yield and acreage equations are formulated within the general model and contain only predetermined independent variables (exogenous or lagged endogenous). Therefore, least squares estimates of the parameters are both consistent and efficient.