The contribution of damage control agents to production differs fundamentally from that of standard inputs (lands, labor, capital). This paper develops an econometric model based on the key characteristics of damage control agents and examines its properties. It demonstrates that standard production function specifications overestimate damage control agent productivity and have erroneous implications for the evolution of damage control agent productivity and use in response to changing environments (e.g., the spread of pest resistance). It also proposes several alternative specifications and discusses methods for estimating them.
This paper examines how crop insurance affects corn farmers' fertilizer and pesticide use in the U.S. Midwest. Crop insurance might be expected to affect chemical use because of “moral hazard”; insured farmers may undertake riskier production than do uninsured farmers. Results suggest that insurance exerts considerable influence on corn farmers' chemical use decisions. Those purchasing insurance applied significantly more nitrogen per acre (19%), spent more on pesticides (21%), and treated more acreage with both herbicides and insecticides (7% and 63%) than did those not purchasing insurance. These results suggest that both fertilizer and pesticides may be risk‐increasing inputs.
We investigate conceptually and empirically the role of economic incentives in the primary land allocation in China in recent years. A theoretical analysis demonstrates how recent fiscal and governance reforms give rise to land conversion decisions and long run urban spatial sizes much like those generated by competitive land markets with private land ownership. An econometric investigation of Shanghai and the provinces surrounding it demonstrates the presence of rent gradients, often used as an indication of the presence of land markets. It thus appears that economic forces have continued to exercise dominant influence over primary land allocations in spite of recent administrative restrictions on land conversion. These rent gradients are strongest in the most economically developed portions of the study region and weakest in the least economically developed. Urban land values exceed agricultural land values by a considerable margin, suggesting that rates of urbanization will continue to be rapid. The estimated rent gradients also suggest that much of this region will eventually become completely urbanized.
ABSTRACT. Land to accommodate urban development in China is provided through requisitions by government officials, suggesting that land availability may be a constraint on urban economic growth. An econometric model of urban GDP growth suggests that land has constrained economic growth in coastal areas but not elsewhere. Elasticities calculated from the estimated coefficients indicate that land availability has a larger proportional impact on economic growth than domestic and foreign investment, labor supply, and government spending. The estimated parameters provide evidence about arbitrage opportunities created by discrepancies between urban land value and compensation for requisitioned rural land, suggesting rural unrest associated with conversion of farmland to urban uses may have some economic roots.
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