Empirical analysis of profit maximization and cost minimization behaviour of Kansas farms

Yacob A. Zereyesus and Allen Featherstone

Applied Economics Letters, 2017, vol. 24, issue 17, 1255-1258

Abstract: A farm-level deterministic and stochastic nonparametric tests of profit maximization and cost minimization behaviour for a sample of 112 Kansas farms was completed from 1996 to 2013. Allowing for monotonic non-regressive technological change and using a 10% significance level, 73 farms violated the profit-maximization hypothesis and 58 farms violated the cost minimization hypothesis. More profit maximization violations existed relative to cost minimization violations. However, comparing these results with results for 289 Kansas farms using data from 1973 to 1990, farms have significantly reduced profit maximizing violations. Cost minimizing behaviour has not changed substantially.

Date: 2017
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DOI: 10.1080/13504851.2016.1270407

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