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A Dynamic Model of Acreage Allocation with General and Crop‐Specific Soil Capital
Author(s) -
Orazem Peter F.,
Miranowski John A.
Publication year - 1994
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 - 10.2307/1243651
Subject(s) - productivity , crop productivity , economics , production (economics) , yield (engineering) , crop production , crop , agricultural economics , crop yield , capital (architecture) , current (fluid) , government (linguistics) , natural resource economics , agricultural engineering , environmental science , microeconomics , agriculture , agronomy , ecology , macroeconomics , history , linguistics , materials science , philosophy , electrical engineering , archaeology , metallurgy , biology , engineering
We develop an empirically tractable model of acreage allocation decisions in which farmers consider impacts of current crop production 00 future soil productivity. Because of the soil productivity effects, future crop prices are shown to affect current acreage allocations. Government programs which alter farmers' expectations of future crop prices relative to current prices also alter farmers' consideration of soil productivity effects of current acreage allocations. Reduced form and structural versions of our model are shown to yield reasonable parameter estimates.