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Shadow vs. market prices in explaining land allocation: Subsistence maize cultivation in rural Mexico

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  • Arslan, AslIhan

Abstract

Prices may fail to explain farmers' land allocation if the relevant decision prices are "shadow prices" that deviate from market prices. This may be the case for farmers who attach significant non-market values to their crops. I theoretically explain why land allocation may not respond to market signals even if transaction costs are not binding. I use nationally representative rural household data from Mexico to show that shadow prices better explain the land subsistence farmers allocate to traditional maize in this center of maize diversity. I discuss the importance of non-market values in understanding supply response and on-farm conservation of traditional crops.

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  • Arslan, AslIhan, 2011. "Shadow vs. market prices in explaining land allocation: Subsistence maize cultivation in rural Mexico," Food Policy, Elsevier, vol. 36(5), pages 605-613, October.
    • Handle: RePEc:eee:jfpoli:v:36:y:2011:i:5:p:605-613
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    Cited by:

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    2. Parisa Aghajanzadeh-Darzi & Pierre-Alain Jayet & Athanasios Petsakos, 2017. "Improvement of a Bio-Economic Mathematical Programming Model in the Case of On-Farm Source Inputs and Outputs," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 15(3), pages 489-508, September.
    3. Embaye, Weldensie T. & Bergtold, Jason S. & Schwab, Benjamin & Zereyesus, Yacob A., 2018. "Modeling Farm Household’s Productivity under Inseparable Production and Consumption decisions," 2018 Annual Meeting, August 5-7, Washington, D.C. 274226, Agricultural and Applied Economics Association.
    4. Chakir, Raja & Lungarska, Anna, 2015. "Agricultural land rents in land use models: a spatial econometric analysis," 150th Seminar, October 22-23, 2015, Edinburgh, Scotland 212641, European Association of Agricultural Economists.
    5. Nikolay Khabarov & Alexey Smirnov & Michael Obersteiner, 2022. "Shadow prices and optimal cost in economic applications," Papers 2211.03591, arXiv.org, revised Nov 2022.
    6. Zabala, Aiora & Barrios, Luis Enrique García & Pascual, Unai, 2022. "From participation to commitment in silvopastoral programmes: Insights from Chiapas, Mexico," Ecological Economics, Elsevier, vol. 200(C).
    7. Chibwana, Christopher & Fisher, Monica & Shively, Gerald, 2012. "Cropland Allocation Effects of Agricultural Input Subsidies in Malawi," World Development, Elsevier, vol. 40(1), pages 124-133.

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    More about this item

    Keywords

    Land allocation Shadow prices Non-market values Traditional crops On-farm conservation Mexico;

    JEL classification:

    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q39 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Other

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