The assumptions of the economic model underlying the traditional Cobb-Douglas production function analysis imply that exact multicollinearity should exist among the inputs. Restricted estimation procedures may lead to parameter estimates with additional economic content. Conventional methods of input aggregation and model specification may result in biased or misinterpreted estimates.
A live-equation demand model of the U.S. shrŸ market was estŸ using annual data for the period from 1950 to 1968. Prices, consumptŸ and ending stocks were the jointly deter. mined variables; predetermined va¡ were shrimp supplies and consumer income. Exvessel price variatŸ resulted largely from variations in domestic landings. Imports reduced the general level of ex-vessel prices but did not contribute substantially to price variability exeept in isolated instances. Large price drop oceurred during periods of recession when increases in demand were slowed and stocks began to build, while landings and imports in. creased substantially over the previous year.
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