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A Programming Model with Stochastic Technology and Prices: The Case of Australian Agriculture

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  • Quirino Paris
  • Christopher D. Easter

Abstract

Risk associated with stochastic input-output coefficients and prices is modeled in a programming specification based upon mean-variance analysis and chance-constrained programming. The algorithm which exploits the features of MINOS, a commercially available computer program, is developed and applied to Australian agriculture. Convergence of the algorithm is discussed. With the data used, the thirty runs of this problem achieved a fast convergence with no more than five cycles. The model was used to derive supply response functions of export commodities of Australian agriculture. The relevant information was generated via parametric variations of prices selected according to a suitable experimental design.

Suggested Citation

  • Quirino Paris & Christopher D. Easter, 1985. "A Programming Model with Stochastic Technology and Prices: The Case of Australian Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(1), pages 120-129.
    • Handle: RePEc:oup:ajagec:v:67:y:1985:i:1:p:120-129.
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    File URL: http://hdl.handle.net/10.2307/1240831
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    Cited by:

    1. Elofsson, Katarina, 2003. "Cost-effective reductions of stochastic agricultural loads to the Baltic Sea," Ecological Economics, Elsevier, vol. 47(1), pages 13-31, November.
    2. Spiro E. Stefanou, 1987. "Technical Change, Uncertainty, and Investment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(1), pages 158-165.
    3. McSweeny, William T. & Shortle, James S., 1990. "Probabilistic Cost Effectiveness In Agricultural Nonpoint Pollution Control," Southern Journal of Agricultural Economics, Southern Agricultural Economics Association, vol. 22(1), pages 1-10, July.
    4. Arfini, Filippo & Donati, Michele & Zuppiroli, Marco & Paris, Quirino, 2005. "Positive Mathematical Programming Approach for Ex-post Evaluation of Set Aside in Italy," 89th Seminar, February 2-5, 2005, Parma, Italy 231828, European Association of Agricultural Economists.
    5. Elofsson, Katarina & Hiron, Matthew & Kačergytė, Ineta & Pärt, Tomas, 2023. "Ecological compensation of stochastic wetland biodiversity: National or regional policy schemes?," Ecological Economics, Elsevier, vol. 204(PA).
    6. 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.
    7. Gren, Ing-Marie, 2008. "Adaptation and mitigation strategies for controlling stochastic water pollution: An application to the Baltic Sea," Ecological Economics, Elsevier, vol. 66(2-3), pages 337-347, June.
    8. Bystrom, Olof & Andersson, Hans & Gren, Ing-Marie, 2000. "Economic criteria for using wetlands as nitrogen sinks under uncertainty," Ecological Economics, Elsevier, vol. 35(1), pages 35-45, October.
    9. McCarl, Bruce A., 1986. "Innovations In Programming Techniques For Risk Analysis," Regional Research Projects > 1986: S-180 Annual Meeting, March 23-26, 1986, Tampa, Florida 271825, Regional Research Projects > S-180: An Economic Analysis of Risk Management Strategies for Agricultural Production Firms.
    10. Sergey S. Rabotyagov, 2010. "Ecosystem Services under Benefit and Cost Uncertainty: An Application to Soil Carbon Sequestration," Land Economics, University of Wisconsin Press, vol. 86(4), pages 668-686.
    11. McSweeny, William T. & Shortle, James S., 1989. "Reducing Nutrient Application Rates For Water Quality Protection In Intensive Livestock Areas: Policy Implications Of Alternative Producer Behavior," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 18(1), pages 1-11, April.
    12. MacAulay, T. Gordon & Hertzler, Greg, 2000. "Modelling Farm Households in a Spatial Context: Vietnamese Agriculture," 2000 Conference (44th), January 23-25, 2000, Sydney, Australia 123701, Australian Agricultural and Resource Economics Society.

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