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Sequential Decision Making in Production Models

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  • Antle, John M.

Abstract

Single equation estimates of production models usually are justified by the assumption that production inputs are chosen as part of a one-period decision problem. Yet, most production decisions in agriculture are made sequentially. In this paper the farmer's optimal input choices are modeled as optimal controls in a stochastic control problem. A two-period Cobb-Douglas example is used to show that sequential solutions to production problems may yield models which require either single equation or simultaneous equation estimators. Functional separability, stochastic specification, and behavior under uncertainty are discussed in the context of dynamic production models.

Suggested Citation

  • Antle, John M., 1983. "Sequential Decision Making in Production Models," 1983 Annual Meeting, July 31-August 3, West Lafayette, Indiana 279107, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea83:279107
    DOI: 10.22004/ag.econ.279107
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    References listed on IDEAS

    as
    1. Amemiya, Takeshi, 1974. "The nonlinear two-stage least-squares estimator," Journal of Econometrics, Elsevier, vol. 2(2), pages 105-110, July.
    2. Jock R. Anderson, 1973. "Sparse Data, Climatic Variability, and Yield Uncertainty in Response Analysis," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 55(1), pages 77-82.
    3. Michael L. Wyzan, 1983. "Empirical Analysis of Soviet Agricultural Production and Policy: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(1), pages 178-180.
    4. Fair, Ray C, 1970. "The Estimation of Simultaneous Equation Models with Lagged Endogenous Variables and First Order Serially Correlated Errors," Econometrica, Econometric Society, vol. 38(3), pages 507-516, May.
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    Keywords

    Farm Management; Production Economics;

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