Incorporating risk in a positive mathematical programming framework: a dual approach
Paolo Sckokai () and
Australian Journal of Agricultural and Resource Economics, 2017, vol. 61, issue 2
In this study we develop a new methodological proposal to incorporate risk into a farm-level positive mathematical programming (PMP) model. We estimate simulta-neously the farm nonlinear cost function and a farmer-speciﬁc coeﬃcient of absolute risk aversion as well as the resource shadow prices. The model is applied to a sample of representative arable crop farms from the Emilia-Romagna region in Italy. The estimation results conﬁrm the calibration ability of the model and reveal the values of the individual risk aversion coeﬃcients. We use the model to simulate diﬀerent scenarios of crop price volatility, in order to explore the potential risk management role of an agri-environmental scheme.
Keywords: Agricultural Finance; Production Economics; Risk and Uncertainty (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aareaj:302929
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