Agricultural economists are often interested in characterizing or summarizing how economic processes and institutions have changed through time as. well as what paths they are likely to take in future time periods. Given this interest or objective, we are therefore interested in methods of analysis that will accomplish these purposes and that are simple to apply. Within this context the major purpose of this paper is to discuss the concept of a Markov chain process and to indicate its potential usefulness in analyzing problems where detailed time-ordered data exist over some time span. As a particular vehicle for the discussion, a limited example concerning the past and potential size distribution of a sample of hog-producing firms in central Illinois will be analyzed.Although
The Concept of a Markov Chain ProcessGTo provide a base for the analysis to follow, we will sketch in this section the basic concepts of a Markov chain process and state the assumptions, definitions, and theorems underlying this method that are necessary for our purpose.If in any given sequence of experiments the outcome of each particular experiment depends on some chance event, then any such 1.
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