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Aggregation of Heterogeneous Firms in Mathematical Programming Models

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  • Onal, Hayri
  • McCarl, Bruce A

Abstract

Serious aggregation errors may arise in mathematical programming sector models when aggregation is not properly done. Existing aggregation literature mostly focuses on exact aggregation of homogenous groups of firms. However, homogeneity rarely holds in real problem situations. Moreover, theoretical aggregation developments are generally based on the assumption of availability of full information about the firms to be aggregated. Such full information is hardly a plausible assumption when modeling the agricultural sector. This paper discusses an empirical aggregation approach based on decomposition theory, which may be particularly helpful while aggregating heterogenous firms under the absence of full information. Copyright 1989 by Oxford University Press.

Suggested Citation

  • Onal, Hayri & McCarl, Bruce A, 1989. "Aggregation of Heterogeneous Firms in Mathematical Programming Models," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 16(4), pages 499-513.
    • Handle: RePEc:oup:erevae:v:16:y:1989:i:4:p:499-513
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    Cited by:

    1. Jansen, Hans G. P. & Stoorvogel, Jetse J., 1998. "Quantification of aggregation bias in regional agricultural land use models: application to Guacimo county, Costa Rica," Agricultural Systems, Elsevier, vol. 58(3), pages 417-439, November.
    2. Franz Sinabell & Martin Schönhart & Erwin Schmid, 2018. "Austrian Agriculture 2020-2050. Scenarios and Sensitivity Analyses on Land Use, Production, Livestock and Production Systems," WIFO Studies, WIFO, number 61571.
    3. Kurtze, Christiane & Springer, Katrin, 1999. "Modelling the economic impact of global warming in a general equilibrium framework," Kiel Working Papers 922, Kiel Institute for the World Economy (IfW Kiel).
    4. Andrés Weintraub & Carlos Romero, 2006. "Operations Research Models and the Management of Agricultural and Forestry Resources: A Review and Comparison," Interfaces, INFORMS, vol. 36(5), pages 446-457, October.
    5. Mario Andres Fernandez & Pei Huang & Bruce McCarl & Vikram Mehta, 2016. "Value of decadal climate variability information for agriculture in the Missouri River basin," Climatic Change, Springer, vol. 139(3), pages 517-533, December.
    6. Kahil, Mohamed Taher & Albiac, José, 2013. "Greenhouse gases mitigation policies in the agriculture of Aragon, Spain," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 2(1), pages 1-24, April.
    7. Liu, Xuan & van Kooten, Gerrit Cornelis & Duan, Jun, 2020. "Calibration of agricultural risk programming models using positive mathematical programming," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(3), July.
    8. Hofreither, Markus F. & Schmid, Erwin & Sinabell, Franz, 2004. "Phasing Out Of Environmentally Harmful Subsidies: Effects Of The Cap 2003 Reform," 2004 Annual meeting, August 1-4, Denver, CO 20169, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Onal, Hayri & Chen, Xiaoguang & Khanna, Madhu & Huang, Haixiao, 2009. "Mathematical Programming Modeling of Agricultural Supply Response," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49469, Agricultural and Applied Economics Association.
    10. Greiner, Romy, 1996. "On-farm Costs of Soil Salinisation: a Case Study for the Liverpool Plains in New South Wales," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 64(01), pages 1-15, April.
    11. Onal, Hayri & McCarl, Bruce A., 1991. "Aggregation In Mathematical Programming Sector Models And Model Stability," 1991 Annual Meeting, August 4-7, Manhattan, Kansas 271241, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Franz Sinabell & Martin Schönhart & Erwin Schmid, 2015. "Austrian Agriculture 2010-2050. Quantitative Effects of Climate Change Mitigation Measures – An Analysis of the Scenarios WEM, WAM and a Sensitivity Analysis of the Scenario WEM," WIFO Studies, WIFO, number 58400.
    13. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," German Journal of Agricultural Economics, Humboldt-Universitaet zu Berlin, Department for Agricultural Economics, vol. 61(01), pages 1-14, February.
    14. Schmid, Erwin & Sinabell, Franz & Hofreither, Markus F., 2007. "Phasing out of environmentally harmful subsidies: Consequences of the 2003 CAP reform," Ecological Economics, Elsevier, vol. 60(3), pages 596-604, January.
    15. Finger, Robert, 2012. "Biases in Farm-Level Yield Risk Analysis due to Data Aggregation," Journal of International Agricultural Trade and Development, Journal of International Agricultural Trade and Development, vol. 61(1).
    16. Frahan, Bruno Henry de, 2005. "PMP, Extensions and Alternative Methods: Introductory Review of the State of the Art," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24537, European Association of Agricultural Economists.
    17. Das, Prantika & Gundimeda, Haripriya, 2021. "Economic Evaluation of Achieving Biofuel Mandate through Advanced Biofuels in Developing Country: Case of India," 2021 Conference, August 17-31, 2021, Virtual 315355, International Association of Agricultural Economists.
    18. Schmid, Erwin & Sinabell, Franz, 2005. "Using the Positive Mathematical Programming Method to Calibrate Linear Programming Models," Discussion Papers DP-10-2005, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.
    19. Batterham, Robert L. & MacAulay, T. Gordon, 1994. "Price-Linked Farm And Spatial Equilibrium Models," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 38(2), pages 1-28, August.
    20. Schmid, Erwin & Sinabell, Franz, 2006. "Alternative Implementations of the Single Farm Payment - Distributional Consequences for Austria," Discussion Papers DP-17-2006, University of Natural Resources and Life Sciences, Vienna, Department of Economics and Social Sciences, Institute for Sustainable Economic Development.

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