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Optimizing Seed Acreage: Decision Making with Production and Utilization Uncertainties

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  • M. Dean Ethridge
  • Fred C. White
  • D. Kannan

Abstract

Under yield and utilization uncertainties, optimum planted acreage may be estimated using the concept of disequilibrium costs—those costs incurred when production is not matched with utilization. A model to minimize expected disequilibrium cost is formulated and applied to peanut seed acreage in Georgia. Since larger disequilibrium costs result from underproduction than from overproduction of peanut seed, optimum seed acreage increases substantially when allowances are made for existing yield and utilization uncertainties.

Suggested Citation

  • M. Dean Ethridge & Fred C. White & D. Kannan, 1975. "Optimizing Seed Acreage: Decision Making with Production and Utilization Uncertainties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(3), pages 439-449.
    • Handle: RePEc:oup:ajagec:v:57:y:1975:i:3:p:439-449.
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    File URL: http://hdl.handle.net/10.2307/1238406
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    References listed on IDEAS

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    1. Fama, Eugene F, 1970. "Multiperiod Consumption-Investment Decisions," American Economic Review, American Economic Association, vol. 60(1), pages 163-174, March.
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    4. Alain De Janvry, 1972. "Optimal Levels of Fertilization Under Risk: The Potential for Corn and Wheat Fertilization Under Alternative Price Policies in Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 1-10.
    5. Hadar, Josef & Russell, William R., 1974. "Diversification of interdependent prospects," Journal of Economic Theory, Elsevier, vol. 7(3), pages 231-240, March.
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