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Factor Substitution In Australian Agriculture

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  • Vincent, David P.

Abstract

Studies of the ease of substitution between inputs in production have generally been carried out within a production framework of an explicit functional form. In this study, a somewhat different approach is followed. A model of derived demand for primary factors of production, land, labour and capital is formulated to enable inferences to be made about the characteristics of the unspecified production function. The model is used to obtain estimates of the pairwise Allen-Uzawa substitution elasticities which are secondary parameters of the underlying production function. The reported FIML estimates from aggregate time series data for the period 1920/21 to 1969/70 indicate very low and marginally different substitution elasticities between different pairs of factors, suggesting that both the Cobb-Douglas and CES production function specifications for the Australian agricultural sector are inappropriate.

Suggested Citation

  • Vincent, David P., 1977. "Factor Substitution In Australian Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 21(2), pages 1-11, August.
    • Handle: RePEc:ags:ajaeau:22482
    DOI: 10.22004/ag.econ.22482
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    References listed on IDEAS

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    Cited by:

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    2. Buetre, Benjamin L. & Ahmadi-Esfahani, Fredoun Z., 1993. "Estimation of Factor Demand and Substitution in the Australian Pig Industry: A Dual Approach," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(02-1), pages 1-12, August.
    3. McKay, Lloyd & Lawrence, Denis & Vlastuin, Chris, 1980. "Input Demand and Substitution in the Australian Sheep Industry," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 48(02), pages 1-14, August.
    4. Vanzetti, David & Quiggin, John C., 1985. "A Comparative Analysis Of Agricultural Tractor Investment Models," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 29(2), pages 1-20, August.
    5. Tocco, Barbara & Bailey, Alastair & Davidova, Sophia, 2013. "The Theoretical Framework and Methodology to Estimate the Farm Labour and Other Factor-Derived Demand and Output Supply Systems," Working papers 155702, Factor Markets, Centre for European Policy Studies.
    6. Lawrence, Denis, 1990. "A Generalised McFadden Cost Function for Australian Agriculture," 1990 Conference (34th), February 13-15, 1990, Brisbane, Australia 145195, Australian Agricultural and Resource Economics Society.
    7. Yumei Liu & Wuyang Hu & Simon Jetté-Nantel & Zhihong Tian, 2014. "The Influence of Labor Price Change on Agricultural Machinery Usage in Chinese Agriculture," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 62(2), pages 219-243, June.
    8. McKay, Lloyd & Lawrence, Denis & Vlastuin, Chris, 1982. "Production Flexibility and Technical Change in Australia's Wheat-Sheep Zone," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(01), pages 1-18, April.
    9. Na Du & Qianqian Shao & Ruifa Hu, 2019. "Price Elasticity of Production Factors in Beijing’s Picking Gardens," Sustainability, MDPI, vol. 11(7), pages 1-16, April.
    10. Martin, John F., 1982. "Induced Innovation in the High Rainfall Zone," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(03), pages 1-20, December.
    11. Agbola, Frank W., 1999. "The Structure of Production and Investment in Australia's Pastoral Zone," 1999 Conference (43th), January 20-22, 1999, Christchurch, New Zealand 122327, Australian Agricultural and Resource Economics Society.

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