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Corner Solutions in Duality Models: A Cross-Section Analysis of Dairy Production Decisions

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  • Robert D. Weaver
  • Daniel A. Lass

Abstract

Corner solutions are often observed in cross-section samples of farm-level production decisions. An estimation strategy is presented and applied to a uniquely comprehensive data set for Pennsylvania dairy farms. A complete set of choice functions is derived consistent with multiple outputs and multiple inputs, expected profit maximation, and the existence of corner solutions with respect to the labor hiring decision. Results illustrate that substantial estimation bias may occur if the existence of corner solutions is not recognized. Estimated elasticities of choices with respect to input and net output prices indicate substantial responsiveness of choice to price. Results indicate that changes in education and acreage operated result in substantial changes in output and input mixes and that the differences in results for farms, with and without hired labor, are substantial.

Suggested Citation

  • Robert D. Weaver & Daniel A. Lass, 1989. "Corner Solutions in Duality Models: A Cross-Section Analysis of Dairy Production Decisions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(4), pages 1025-1040.
    • Handle: RePEc:oup:ajagec:v:71:y:1989:i:4:p:1025-1040.
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    File URL: http://hdl.handle.net/10.2307/1242679
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    Cited by:

    1. Adélaïde Fadhuile & Stéphane Lemarié & Alain Pirotte, 2016. "Disaggregating the Demand for Pesticides: Does it Matter?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 64(2), pages 223-252, June.
    2. Unknown, 1998. "Commodity Costs and Returns Estimation Handbook (entire book-condensed file)," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    3. Unknown, 1998. "References/Literature Cited," Commodity Costs and Returns Estimation Handbook,, Iowa State University.
    4. Vavra, Pavel & Colman, David, 2003. "The analysis of UK crop allocation at the farm level: implications for supply response analysis," Agricultural Systems, Elsevier, vol. 76(2), pages 697-713, May.

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