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Modeling Supply Response in a Multiproduct Framework
V. Eldon Ball
American Journal of Agricultural Economics
Vol. 70, No. 4 (Nov., 1988), pp. 813-825
Stable URL: http://www.jstor.org/stable/1241922
Page Count: 13
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The paper models multiproduct supply response in agriculture and tests key assumptions traditionally maintained in supply response studies. The technology is approximated by a restricted profit function. The properties of the restricted profit function are imposed during estimation. The hypothesis that maintains the existence of output price and quantity indexes that satisfy the adding-up property is rejected. The existence of individual production functions for each output is also rejected. Unless joint production is permitted, the estimates of responsiveness of a particular commodity to changes in own price or prices of competing outputs are likely to be considerably understated.
American Journal of Agricultural Economics © 1988 Agricultural & Applied Economics Association