Do New York Dairy Farmers Maximize Profits or Minimize Costs?

Loren W. Tauer

American Journal of Agricultural Economics, 1995, vol. 77, issue 2, 421-429

Abstract: The Weak Axiom of Profit Maximization and Weak Axiom of Cost Minimization were used to determine whether each of forty-nine New York dairy farms displayed behavior consistent with profit maximization or cost minimization. These were tested for each farm across eleven years of data, correcting for technological change using previously estimated nonparametric Malmquist productivity indices. The results indicate that some were moderately successful in maximizing profits, but more came closer to minimizing costs. Over half of the observations were within 10% of minimum costs.

Date: 1995
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Persistent link: https://EconPapers.repec.org/RePEc:oup:ajagec:v:77:y:1995:i:2:p:421-429.

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