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Marginal Risk Constraint Linear Program for Activity Analysis

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  • Joyce T. Chen
  • C. B. Baker

Abstract

A dichotomous Marginal Risk Constraint (MRC) criterion is proposed to take explicit account of activity income covariance relationships and to restrict the choice of activities within the range of rational combinations. A parametric LP solution procedure is also presented. The E,V boundary approximated is satisfactorily close to that generated from QP.

Suggested Citation

  • Joyce T. Chen & C. B. Baker, 1974. "Marginal Risk Constraint Linear Program for Activity Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(3), pages 622-627.
    • Handle: RePEc:oup:ajagec:v:56:y:1974:i:3:p:622-627.
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    File URL: http://hdl.handle.net/10.2307/1238617
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    Cited by:

    1. S. Martin & F. McLeay, 1998. "The Diversity of Farmers' Risk Management Strategies in a Deregulated New Zealand Environment," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(2), pages 218-233, June.
    2. McCarl, Bruce A., 1984. "Model Validation: An Overview with some Emphasis on Risk Models," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 52(03), pages 1-21, December.
    3. Gali, Jyothi & Brown, Colin G., 2000. "Assisting decision-making in Queensland barley production through chance constrained programming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), pages 1-19.
    4. Bravo-Ureta, Boris E. & Cocchi, Horacio & Solís, Daniel, 2006. "Output Diversification among Small-Scale Hillside Farmers in El Salvador," IDB Publications (Working Papers) 3012, Inter-American Development Bank.
    5. Libbin, James D. & Johnson, Donald A. & Boehlje, Michael D. & Trede, Larry D., 1977. "A Risk-Return Analysis For The Midwest Farmer-Feeder," ISU General Staff Papers 197712010800001065, Iowa State University, Department of Economics.
    6. Shonkwiler, J. Scott & Emerson, Robert D., 1981. "The Market for Winter Tomatoes: A Rational Expectations Interpretation," 1981 Annual Meeting, July 26-29, Clemson, South Carolina 279305, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    7. Colette, W. Arden & Hubbard, Steven P., 1980. "Utilization Of An E-L Frontier To Evaluate Differences In—Risk Preference Between Large And Small Farm Operators," 1980 Annual Meeting, July 27-30, Urbana-Champaign, Illinois 278879, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    8. Musshoff, Oliver & Hirschauer, Norbert, 2008. "Sophisticated Program Planning Approaches Generate Large Benefits in High Risk Crop Farming," 82nd Annual Conference, March 31 - April 2, 2008, Royal Agricultural College, Cirencester, UK 36865, Agricultural Economics Society.
    9. Anderson, Jock R., 1975. "Programming For Efficient Planning Against Non-Normal Risk," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 19(2), pages 1-14, August.
    10. Musshoff, Oliver & Hirschauer, Norbert, 2007. "What benefits are to be derived from improved farm program planning approaches? - The role of time series models and stochastic optimization," Agricultural Systems, Elsevier, vol. 95(1-3), pages 11-27, December.
    11. Libbin, James D., 1982. "Projections of US farm numbers by Markov processes," ISU General Staff Papers 198201010800008508, Iowa State University, Department of Economics.
    12. Helmers, Glenn A., 1979. "Deriving Risk-Income Relationships For Production-Marketing Decisions By Simulation," Risk Management in Agriculture: Behavioral, Managerial, and Policy Issues, January 25-26, 1979, San Francisco, California 271463, Regional Research Projects > W-149: An Economic Evaluation of Managing Market Risks in Agriculture.
    13. van Zyl, J. & Groenewald, J. A., 1986. "A Comparison Of Certain Decision-Making Techniques Under Risk - An Empirical Investigation Of Maize Cultivar Selection," Agrekon, Agricultural Economics Association of South Africa (AEASA), vol. 25(1), February.
    14. Schoney, R. A., 1990. "An Analysis of Wheat Supply Response Under Risk and Uncertainty," Working Papers 244030, Agriculture and Agri-Food Canada.
    15. Helmers, Glenn A. & Held, Larry J. & Watts, Myles J., 1982. "Estimating the Impact of Safety First Risk Constraints on Risk-Income Frontiers," 1982 Annual Meeting, August 1-4, Logan, Utah 279474, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    16. Pannell, David J., 1988. "Modelling Risk in Linear Programming Using Direct Solution of Linearly Segmented Approximations of the Utility Function," Discussion Papers 315423, University of Western Australia, School of Agricultural and Resource Economics.
    17. Witt, Rudolf & Waibel, Hermann, 2009. "Lower Partial Moments as a measure of vulnerability to poverty in Cameroon," Hannover Economic Papers (HEP) dp-434, Leibniz Universität Hannover, Wirtschaftswissenschaftliche Fakultät.
    18. Culas, Richard J., 2006. "Causes of farm diversification over time: an Australian perspective on an Eastern Norway model," AFBM Journal, Australasian Farm Business Management Network, vol. 3(1), pages 1-9.

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