Profit, Output Supply, and Input Demand Functions for Multiproduct Firms: The Case of Australian Agriculture

Measurement of total factor productivity growth and biases in technological change in Western Australian agriculture

“…The own-price elasticities are all of the expected signs as this is imposed by the specification. The crops elasticity of 0.488 is almost identical to the value of 0.50 reported by McKay et al (1983). The McKay et al report differs from this study in that it uses Australia-wide data instead of Western Australian; it utilizes the Translog functional form rather than the GM; and it does not include the 1980s observations.…”

“…The advantages of the dual profit function approach to the modelling of multiple output production systems in Australian agriculture are well documented by McKay et al (1983), Wall and Fisher (1987), Lawrence and Zietsch (1990), and Low and Hinchy (1990). The primary advantage of the dual approach in this study is that the method permits the specification of non-neutral technical change in both inputs and outputs, which would not be possible in an analysis involving the direct estimation of a singleoutput production function.…”

“…The two most popular functional forms specified for profit and cost functions in dual analyses of agricultural production over the past 15 years have been the Translog (Ray, 1982;McKay et al, 1983;Weaver, 1983;Antle, 1984;Kuroda, 1988;Glass and McKillop, 1989) and the Normalized Quadratic (Shumway, 1983;Shumway and Alexander, 1988;Huffman and Evenson, 1989). The principal advantage of the GM functional form over these two functional forms is its ability to deal with the violation of the necessary curvature conditions, which have plagued so many applied studies in the past.…”

Input substitution and technological development on Finnish dairy farms for 1965-1991: Empirical application on bookkeeping dairy farms

“…According to him, this may have been caused by e.g., errors in the approximation and assumptions, problems in the measurement, as well as by the fact that the data could include farms that did not maximize profit (see also McKay et al 1983, Shumway 1983, Weawer 1983, Lopez 1984). However, it should be noted that in Higgins' results only own price elasticity for crop output had the wrong sign, which automatically meant rejection of the assumption of convexity and, hence, the profit maximization hypothesis.…”

The impact of biofuels policy on agribusiness stock prices

“…0 ≥ Limited econometric information is available on whether this assumption applies for fertilizer, seed and machinery, in part because of data aggregation across crops and inputs. The data that are available, mainly for fertilizer and machinery, provide mixed but generally supportive results (McKay, Lawrence and Vlastuin, 1983;Huffman and Evenson, 1989). In addition, the law of supply requires that output increases in response to an increase in own price so that some input must increase.…”