Since 2014
Cost function and positive mathematical programming
Bio-based and Applied Economics
View Archive Info| Field | Value | |
| Title |
Cost function and positive mathematical programming
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| Creator |
Paris, Quirino; University of California, Davis
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| Subject |
positive mathematical programming; solution uniqueness; supply elasticities; calibrating model
C6 |
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| Description |
A line of research in Positive Mathematical Programming (PMP) has pursued the goal of estimating a cost function capable of reproducing the base-year results in a sample of farms. Originally, the PMP approach estimated a “myopic” cost function, that is, a cost relation depending only on the output levels observed during a production cycle. No input price entered this type of cost function. In this paper we define and estimate a proper cost function that calibrates the economic results of a sample of farms. In the process, we demonstrate the existence of a unique solution of the PMP problem when observed output quantities and limiting input prices are taken as calibrating benchmarks. Furthermore, the paper shows how to obtain endogenous output supply elasticities that calibrate with available exogenous information in the form of previously estimated elasticities for an entire region or sector. This framework is applied to a sample of Italian farms that admit no production for some of the crop activities. This PMP model can be used to explore farmers’ response to various policy decisions involving output prices, environmental constraints, limiting input supply, and other government interventions.
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| Publisher |
Bio-based and Applied Economics
Bio-based and Applied Economics |
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| Contributor |
—
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| Date |
2017-07-18
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| Type |
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion — |
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| Format |
application/pdf
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| Identifier |
http://www.fupress.net/index.php/bae/article/view/18140
http://www.fupress.net/index.php/bae/article/download/18140/19302 10.13128/BAE-18140 |
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| Source |
Bio-based and Applied Economics; Vol 6, No 1 (2017); 19-35
Bio-based and Applied Economics; Vol 6, No 1 (2017); 19-35 2280-6172 2280-6180 |
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| Language |
eng
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| Relation |
10.13128/BAE-18140
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| Rights |
The authors retain all rights to the original work without any restrictions.License for Published ContentsYou are free to copy, distribute and transmit the work, and to adapt the work. You must attribute the work in the manner specified by the author or licensor (but not in any way that suggests that they endorse you or your use of the work).Licence scheme | Legal codeLicense for MetadataThis Journal published articles metadata are dedicated to the public domain by waiving all publisher's rights to the work worldwide under copyright law, including all related and neighboring rights, to the extent allowed by law.You can copy, modify, distribute and perform the work, even for commercial purposes, all without asking permission.Licence scheme | Legal code
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