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Application of Multivariate Probit to a Threshold Model of Grain Dryer Purchasing Decisions
Author(s) -
Hill Lowell,
Kau Paul
Publication year - 1973
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 - 10.2307/1238657
Subject(s) - purchasing , multivariate probit model , probit model , ordered probit , econometrics , probit , purchasing decision , multivariate statistics , economics , business , agricultural science , statistics , agricultural economics , operations management , mathematics , environmental science
Purchase of grain dryers by farmers can be explained using a threshold theory of decision in which a reaction occurs only after the strength of the stimuli increases beyond the farmers' reaction threshold. Estimates of the causal relationships in this dichotomous decision model were obtained by using the probit technique with data from a farmer panel. The results provide an explanation of differences in the number of dryers purchased by farmers in various classes and regions. It also provides a procedure for predicting dryer ownership and purchases of dryers as an aid to forward planning by distributors of drying equipment.