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Net Investment in Farm Tractors: An Econometric Analysis

Author

Listed:
  • John B. Penson
  • Robert F. J. Romain
  • Dean W. Hughes

Abstract

A wide range of assumptions about the capital deterioration and marginal factor cost of tractors has been made in previous studies. This study develops a measure of the implicit rental price of tractors which accounts for the capital structure used by farmers, the capacity depreciation of tractors, and income tax considerations. Estimates of net investment models for alternative capacity depreciation patterns are compared to those suggested by engineering considerations. The results show that the frequently used geometric decay pattern does the poorest job of explaining annual real net investment in farm tractors.

Suggested Citation

  • John B. Penson & Robert F. J. Romain & Dean W. Hughes, 1981. "Net Investment in Farm Tractors: An Econometric Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 63(4), pages 629-635.
    • Handle: RePEc:oup:ajagec:v:63:y:1981:i:4:p:629-635.
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    Citations

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    Cited by:

    1. Warjiyo, Perry & Huffman, Wallace E., 1997. "Dynamic input demand functions and resource adjustment for US agriculture: state evidence," Agricultural Economics, Blackwell, vol. 17(2-3), pages 223-237, December.
    2. 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.
    3. Chen, Dean T. & Penson, John B. & Teboh, Jacob F., 1988. "The Implicit Revenue Function Approach to Farm Program Analysis," Staff Reports 257912, Texas A&M University, Agricultural and Food Policy Center.
    4. Abebe, Kassahun & Dahl, Dale C. & Olson, Kent D., 1990. "How Good Are Input Demand Models Used In Previous Studies Now?," Staff Papers 13587, University of Minnesota, Department of Applied Economics.
    5. Hardin, Erin M. & Penson, John B., 2017. "Ability to Pay and Agriculture Sector Stability," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252829, Southern Agricultural Economics Association.
    6. Vasavada, Utpal & Ball, V. Eldon, 1988. "Modeling Dynamic Adjustment In A Multi-Output Framework," Staff Reports 278021, United States Department of Agriculture, Economic Research Service.
    7. Carpentier, Alain & Gohin, Alexandre & Sckokai, Paolo & Thomas, Alban, 2015. "Economic modelling of agricultural production: past advances and new challenges," Revue d'Etudes en Agriculture et Environnement, Editions NecPlus, vol. 96(01), pages 131-165, March.
    8. Wang, Sun Ling & Schimmelpfennig, David & Ball, Eldon, 2013. "Embodied-Technical Change of Farm Tractors in U.S. Agricultural Productivity Analysis: What Does Hedonic Price Tell Us?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 151211, Agricultural and Applied Economics Association.
    9. Pagoulatos, Angelos & Debertin, David L. & Johnson, William L., 1982. "An Econometric Analysis of Qualitative Choice Among Performance Characteristics of Agricultural Tractors," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 14(2), pages 83-89, December.
    10. Nielsen, Elizabeth G. & Miranowski, John A. & Morehart, Mitchell J, 1989. "Investments in Soil Conservation and Land Improvements: Factors Explaining Farmers' Decisions," Agricultural Economic Reports 308064, United States Department of Agriculture, Economic Research Service.
    11. Abebe, Kassahun & Dahl, Dale C. & Olson, Kent D., 1989. "The Demand For Farm Machinery," Staff Papers 14194, University of Minnesota, Department of Applied Economics.
    12. Trueblood, Michael A., 1994. "An Annotated Bibliography Of Selected Productivity Literature," Staff Papers 13580, University of Minnesota, Department of Applied Economics.
    13. Lefebvre, Marianne & Gomez y Paloma, Sergio & Viaggi, Davide, 2014. "EU farmers' intentions to invest in 2014-2020: complementarity between asset classes," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182737, European Association of Agricultural Economists.
    14. Hughes, Dean W. & Penson Jr., John B. & Bednarz, Curtis R., 1984. "Subsidized Credit And Investment In Agriculture: The Special Case Of Farm Real Estate," 1984 Annual Meeting, August 5-8, Ithaca, New York 279062, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Penson, John B. & Taylor, C. Robert, 1990. "Modeling the Interface Between Agriculture and the General Economy," Working Papers 258042, Texas A&M University, Agricultural and Food Policy Center.
    16. Vasavada, Utpal, 1985. "An Integrated Investment—Supply Response Model for U.S. Agriculture," 1985 Annual Meeting, August 4-7, Ames, Iowa 278647, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    17. Trueblood, Michael A. & Ruttan, Vernon W., 1992. "A Comparison Of Multifactor Productivity Calculations Of The U.S. Agricultural Sector," Staff Papers 14165, University of Minnesota, Department of Applied Economics.
    18. D. N. Cooper, 1994. "Net Investment In Agricultural Tractors," Journal of Agricultural Economics, Wiley Blackwell, vol. 45(3), pages 339-350, September.
    19. Tsigas, Marinos E. & Hertel, Thomas W., 1989. "Testing Dynamic Models Of The Farm Firm," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(1), pages 1-10, July.
    20. Kuchler, Fred & Vroomen, Harry, 1987. "Impacts of the PIK Program on the Farm Machinery Market," Journal of Agricultural Economics Research, United States Department of Agriculture, Economic Research Service, vol. 39(3), pages 1-10.
    21. Gustafson, Cole R. & Barry, Peter J. & Sonka, Steven T., 1988. "Machinery Investment Decisions: A Simulated Analysis For Cash Grain Farms," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 13(2), pages 1-10, December.
    22. Penson, John B. & Chen, Dean T., 1988. "Design and Application of a Structural General Equilibrium Model to Farm Policy Analysis," Staff Reports 257926, Texas A&M University, Agricultural and Food Policy Center.
    23. Conway, Roger & Hrubovcak, James & LeBlanc, Michael, 1985. "The Structure of Agricultural Investment: Comparing a Flexible Accelerator with Stochastic Coefficients," Technical Bulletins 157016, United States Department of Agriculture, Economic Research Service.

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