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Reliability of Supply Equations Derived from Production Functions
Author(s) -
Wipf Larry J.,
Bawden D. Lee
Publication year - 1969
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 - 10.2307/1238313
Subject(s) - production (economics) , econometrics , reliability (semiconductor) , economics , regression analysis , regression , supply , water supply , mathematics , statistics , microeconomics , environmental science , physics , environmental engineering , power (physics) , quantum mechanics
This paper examines the reliability of supply functions derived from empirically estimated production functions. Firm‐level supply equations are derived from production functions for selected agricultural commodities, and these are used to predict firm output and to estimate supply elasticities. The results are then compared with actual or expected output and with supply elasticities estimated directly by regression analysis of time series data. Output predictions ranged from slight under‐estimates to extreme over‐estimates of actual output, with the latter being most prevalent. The derived supply elasticities were generally higher than those obtained by direct regression analysis.