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Potential Entrants and Projections in Markov Process Analysis

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  • Bernard F. Stanton
  • Lauri Kettunen

Abstract

Markov processes, despite their limitations, are becoming more widely used as a method of making projections of size and income distributions. The number of potential entrants to an industry or a population assumed in an analysis has an important effect on both short-run projections and equilibrium solutions. The number of potential entrants is not a passive variable, as has often been said or implied. Through the use of changes in the number and size of dairy farms in New York State as an example, alternative projections in the short run are presented for different assumptions about the number of potential entrants. The general case is developed algebraically for the effect of the number of potential entrants assumed (N) on the equilibrium solution for the vector t.

Suggested Citation

  • Bernard F. Stanton & Lauri Kettunen, 1967. "Potential Entrants and Projections in Markov Process Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 49(3), pages 633-642.
    • Handle: RePEc:oup:ajagec:v:49:y:1967:i:3:p:633-642.
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    Citations

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    Cited by:

    1. Huettel, Silke & Jongeneel, Roelof A., 2009. "Impact of the EU Milk Quota on Structural Change in the Dairy Sectors of Germany and The Netherlands," 2009 Conference, August 16-22, 2009, Beijing, China 50943, International Association of Agricultural Economists.
    2. Disney, W. Terry & Duffy, Patricia A. & Hardy, William E., Jr., 1988. "A Markov Chain Analysis Of Pork Farm Size Distributions In The South," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 20(2), pages 1-8, December.
    3. Huettel, Silke & Jongeneel, Roelof A., 2008. "Structural Change in the Dairy Sectors of Germany and The Netherlands - A Markov Chain Analysis," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43659, European Association of Agricultural Economists.
    4. Jensen, Harald R., 1977. "PART I. Farm Management and Production Economics, 1946-70," AAEA Monographs, Agricultural and Applied Economics Association, number 337213, january.
    5. Jongeneel, Roelof A. & Longworth, Natasha & Huettel, Silke, 2005. "Dairy Farm Size Distribution in East and West: Evolution and Sensitivity to Structural and Policy Variables: Case-Studies of the Netherlands, Germany, Poland and Hungary," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24772, European Association of Agricultural Economists.
    6. Stavins, R. N. & Stanton, B. F., 1980. "Alternative Procedures For Estimating The Size Distribution Of Farms," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-6, October.
    7. Skinner, S. P. & Lee, T. C. & Seaver, S. K., 1980. "Structural Change In The New England Egg Industry: A Markov Analysis," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(2), pages 1-7, October.
    8. Skinner, S. P. & Lee, T. C. & Seaver, S. K., 1980. "Structural Change In The New England Egg Industry: A Markov Analysis," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 0(Number 2), pages 1-7, October.
    9. Ethridge, Don E. & Roy, Sujit K. & Myers, David W., 1983. "Changes in the Structure of the Texas High Plains Cotton Ginning Industry, 1967-1999," Archive 259788, Texas Tech University, Department of Agricultural and Applied Economics.
    10. Alexander Gocht & Norbert Röder & Sebastian Neuenfeldt & Hugo Storm & Thomas Heckelei, 2012. "Modelling farm structural change: A feasibility study for ex-post modelling utilizing FADN and FSS data in Germany and developing an ex-ante forecast module for the CAPRI farm type layer baseline," JRC Research Reports JRC75524, Joint Research Centre.
    11. Ethridge, Don E. & Roy, Sujit K. & Myers, David W., 1985. "A Markov Chain Analysis Of Structural Changes In The Texas High Plains Cotton Ginning Industry," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 17(2), pages 1-10, December.
    12. Dent, Warren Thomas & Ballintine, Richard, 1971. "A Review Of The Estimation Of Transition Probabilities In Markov Chains," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 15(2), pages 1-13, August.
    13. Zimmermann, Andrea & Heckelei, Thomas & Perez Dominguez, Ignacio, 2006. "Working paper: Literature Review of Approaches to Estimate Structural Change," Reports 9304, Wageningen University, SEAMLESS: System for Environmental and Agricultural Modelling; Linking European Science and Society.
    14. Stavins, R. N. & Stanton, B. F., 1980. "Alternative Procedures For Estimating The Size Distribution Of Farms," Journal of the Northeastern Agricultural Economics Council, Northeastern Agricultural and Resource Economics Association, vol. 9(2), pages 1-6, October.
    15. Piet, Laurent, 2008. "The evolution of farm size distribution: revisiting the Markov chain model," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44269, European Association of Agricultural Economists.
    16. Smith, Matthew G., 1988. "A Conditional Approach To Projecting Farm Structure," Staff Reports 278025, United States Department of Agriculture, Economic Research Service.

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