Premium
Production Function Estimation and Related Risk Considerations
Author(s) -
Just Richard E.,
Pope Rulon D.
Publication year - 1979
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 - 10.2307/1239732
Subject(s) - multiplicative function , a priori and a posteriori , variance (accounting) , estimation , production (economics) , specification , function (biology) , econometrics , mathematics , marginal distribution , computer science , statistics , mathematical optimization , random variable , economics , management , evolutionary biology , biology , mathematical analysis , philosophy , accounting , epistemology , macroeconomics
There has been considerable interest in estimations of input effects on the probability distribution of output. Most empirical and theoretical analyses utilize multiplicative stochastic specifications which are analyzed and found unduly restrictive, particularly since inputs that marginally reduce risk are not allowed. A more general stochastic specification is proposed, free of these a priori restrictions. The proposed functional form estimation is discussed and demonstrated with nitrogen‐response data and common log‐linear production functions. Though nitrogen is risk‐increasing, the marginal variance contribution is smaller when compared to estimates based upon multiplicative specification. Finally, stochastic specification error effects are analyzed.