A method is developed to permit joint estimation of risk preference structure, degree of risk aversion, and production technology. The method is implemented using the Expo-Power utility function, which imposes no restrictions on risk preference structure. The empirical application uses data from a sample of Kansas wheat farmers. Evidence rejects the null hypothesis of risk neutrality and suggests that Kansas farmers exhibit decreasing absolute risk aversion and increasing relative risk aversion. Results also show that combined estimation of production function parameters with the utility function parameter is more efficient than is separate estimation of each.
RESEARCH N early 20% of the world's cultivated area is aff ected by salinity (Sairam and Tyagi, 2004). Salinity is caused by rock weathering, wind-transported materials, poor-quality irrigation water, and seawater intrusion onto land. The total saline area of North, Central, and South America is 15.8, 2.0, and 129.0 million ha, respectively (Rengasamy, 2006). Overall health of soybean [Glycine max (L.) Merr.] plants and seed yield are aff ected by saline conditions. The threshold salinity for soybean is 5.0 dS m-1 (Chinnusamy et al., 2005). Salt damage in soybean results from the accumulation of chloride in stems and leaves, which causes leaf necrosis; reduces greenness in leaves, plant biomass, plant height, leafl et size, seed yield, seed quality, and fi eld seed emergence; and increases plant mortality (Able and MacKenzie, 1964;
Technology, supply, and demand relationships among six Texas field crops and three variable inputs are investigated using a dual approach. Evidence of nonjoint production is found for wheat but not for other crops. Cotton, sorghum, and corn are homothetically separable. No larger groups of outputs nor any input groups satisfy the sufficient dual conditions for consistent aggregation and two‐stage choice. Production is homothetic in outputs, fertilizer, and hired labor. Product supply and input demand equations are estimated. Estimates are inconsistent with expectations of the competitive model. The normalized profit function Hessian is not positive definite, and parameter symmetry is rejected.
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