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Farm‐Level Fertilizer Demand in Java: A Meta‐Production Function Approach
Author(s) -
Pitt Mark M.
Publication year - 1983
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 - 10.2307/1240498
Subject(s) - economics , fertilizer , profit (economics) , econometrics , production (economics) , variety (cybernetics) , demand curve , microeconomics , agricultural economics , agricultural engineering , statistics , mathematics , agronomy , biology , engineering
Abstract This paper models seed variety choice and the demand for variable inputs as jointly determined by profit‐maximizing cultivators. The approach parallels that of Hayami and Ruttan, who postulated that changes in the output‐fertilizer price ratio induce movements along a meta‐fertilizer response function, the envelope of individual variety‐specific response surfaces. Ignoring the possibility of seed variety switching leads to underestimates of fertilizer demand elasticities. In addition, estimation with samples reflecting a single seed variety may involve serious selection bias. A two‐stage procedure which adjusts for selectivity bias is used to estimate the model with farm‐level data from Java.