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Dairy Supply and Factor Demand Response to Output Price Risk: An Econometric Assessment

Published online by Cambridge University Press:  10 May 2017

Yir-Hueih Luh  and
Spiro E. Stefanou
Yir-Hueih Luh
Affiliation:
Department of Agricultural Economics and Rural Sociology, Pennsylvania State University
Spiro E. Stefanou
Affiliation:
Department of Agricultural Economics and Rural Sociology, Pennsylvania State University
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Abstract

The model of production decision making for the expected utility maximizing firm under output price uncertainty is applied to a panel Pennsylvania dairy operators. The model generalized duality implemented in this paper has the advantage of generating a system of supply and variable factor demand functions that consistently account for the presence of output price risk. The application to Pennsylvania dairy operators indicates that output price risk measured by the second and third moments of individual operators’ historical output price series is not an important factor in production decision making. In addition to not maximizing expected utility, these operators are not expected profit maximizers.

Type
Articles
Information
Northeastern Journal of Agricultural and Resource Economics , Volume 18 , Issue 2 , October 1989 , pp. 103 - 108
Copyright
Copyright © 1989 Northeastern Agricultural and Resource Economics Association 

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Footnotes

Journal Series Article No. 8193 of the Pennsylvania Agricultural Experiment Station.

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