CiNii Books - Perverse supply response in agriculture : the importance of produced means of production and uncertainty

The law of supply is one of the simplest and most powerful predictions of neoclassical economic theory. However, like all theories, it is based upon a number of assumptions, departure from which may jeopardise its predictions. This book investigates such departures and the possibility that they may result in "perverse" supply response in agriculture. Two areas in particular are examined, concerning uncertainty and Sraffian produced means of production. Insufficient evidence is found to support the argument that uncertainty and risk aversion lead to perversity, at least in U.S. agriculture; while, although an apparently perverse aggregate supply response is indentified in U.K. agriculture, this arises from failure to take account of produced inputs. Thus, the overall conclusion drawn from this work is that farmers, at least in developed countries, do respond normally to price incentives.

Table of Contents

The neoclassical theory of production - a summary - introduction
the neoclassical theory of production
duality
the law of supply
the law of supply - unstated assumptions and possible breakdown
literature review - introduction
naive models of supply response
peasant production
the target income hypothesis, own-consumption and the marketed surplus, agricultural household models, peasant production - conclusion, Sraffian economics and produced means of production
uncertainty and risk aversion
produced inputs, aggregation and perversity - introduction
comparative statics with produced means of production
separability and aggregation
aggregate supply response without produced inputs
aggregate supply response with produced inputs
produced inputs and perversity in UK agriculture - a simulation exercise using the Manchester policy model - introduction
index numbers
the Manchester Agricultural Policy Simulation (MAPS) model
general description, aggregation procedure, simulation results
discussion of simulation results and conclusion
uncertainty, duality and perversity - introduction
uncertainty and risk - von Neumann-Morgenstern utility theory
attitude towards risk, the constant absolute risk aversion utility function, duality and uncertainty
the envelope theorem and an arbitrary utility function
the envelope theorem and the constant absolute risk aversion utility function, uncertainty and perversity - Baron's hypothesis
a stochastic model of production
modelling assumptions, the proposed model, regularity conditions, conclusion
a stochastic model of US agriculture - introduction, the data, the convexity problem, the quasi-CES function, the empirical model, output supply and input demand elasticities, empirical results, conclusion
conclusion - summary
limitations and suggestions for further research
final comments.

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Perverse supply response in agriculture : the importance of produced means of production and uncertainty

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