Multiple input, multiple output production choices and technology in Southern agriculture : interstate comparisons

Abstract

Dual economic specifications of a multiple input multiple output production technology were used to test the structure of agricultural production and estimate output supply and input demand relationships independently for five Southern states Texas, Oklahoma, Arkansas, Mississippi, and Louisiana) in two USDA farm production regions (Southern Plains and Delta States) The structural hypotheses of production that were tested included short-run nonjointness of outputs homothetic separability of output and input subsets and identical technologies across states The structural tests provided empirical evidence for substantial analytical simplification of the models describing multi product production relationships in all five Southern states. Short-run nonjointness was supported by the data for selected outputs, but the outputs with support varied greatly among states. Several commodities and variable inputs satisfied sufficient conditions for consistent aggregation( i . e . homothetic separability) in different subsets in each state. Sufficient conditions for consistent geographic aggregation across states were not satisfied by the data. Two-stage optimization of choice was conducted in each state consistent with the nonrejected structural hypotheses of homothetic separability. Each stage (aggregate model or allocation model) was modeled and estimated consistent with a competitive. profit-maximizing state industry facing constant prices for outputs and variable inputs. Linear homogeneity, cross-price symmetry and convexity of the profit function in prices were maintained in the estimation..