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Small Holders under Risk

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  • Hertzler, Greg
  • MacAulay, T. Gordon

Abstract

A generalisation of previous household models is developed to include production, consumption, storage, labour and land allocation decisions under price, yield, storage and investment risks. Implications drawn from this model include, that consumption can be a hedge against price risk and that supply curves are shifted by consumption and by storage decisions. Production possibilities frontiers depend upon the households’ aversion to risk and the allocation of land to different crops is affected by every other decision the household makes. Using hypothetical data and focussed on farm households in Vietnam, parameters are estimated for the model and simulations are carried out to examine the consequences of land exchanges and shifts in technology.

Suggested Citation

  • Hertzler, Greg & MacAulay, T. Gordon, 2006. "Small Holders under Risk," 2006 Conference (50th), February 8-10, 2006, Sydney, Australia 139791, Australian Agricultural and Resource Economics Society.
    • Handle: RePEc:ags:aare06:139791
    DOI: 10.22004/ag.econ.139791
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    References listed on IDEAS

    as
    1. Greg Hertzler, 1991. "Dynamic Decisions under Risk: Application of Ito Stochastic Control in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1126-1137.
    2. Janury, A. de & Fafchamps, M. & Raki, M. & Sadoulet, Elisabeth, 1992. "A Computable Household Model Approach to Policy Analysis: Structural Adjustment and the Peasantry in Morocco," 1992 Occasional Paper Series No. 6 197890, International Association of Agricultural Economists.
    3. Fafchamps, Marcel, 1993. "Sequential Labor Decisions under Uncertainty: An Estimable Household Model of West-African Farmers," Econometrica, Econometric Society, vol. 61(5), pages 1173-1197, September.
    4. de Janvry, A, et al, 1992. "Structural Adjustment and the Peasantry in Morocco: A Computable Household Model," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 19(4), pages 427-453.
    5. Hertzler, Greg, 1991. "Dynamic Decisions Under Risk: Applications of Ito Stochastic Control in Agriculture," 1991 Conference (35th), February 11-14, 1991, Armidale, Australia 145902, Australian Agricultural and Resource Economics Society.
    6. Saha, Atanu, 1994. "A two-season agricultural household model of output and price uncertainty," Journal of Development Economics, Elsevier, vol. 45(2), pages 245-269, December.
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