Supply Response and Dynamic Factor Demand of Dutch Dairy Farms

Geert Thijssen

European Review of Agricultural Economics, 1994, vol. 21, issue 2, 241-58

Abstract: A dynamic equation system of factor demand, based on the adjustment cost hypothesis, is estimated using an incomplete panel of Dutch dairy farms. An instrumental variable estimator is used, based on first differences of the variables. The theoretical framework fits the data well. Investments are sensitive to price changes and technical change. Partly as a result of this, the influence of technical change on the demand for the variable input, the output supply and the demand for capital is important. However, the price elasticities of the output and the variable input are small, even in the long-run. Copyright 1994 by Oxford University Press.

Date: 1994
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European Review of Agricultural Economics is currently edited by Timothy Richards, Salvatore Di Falco, Céline Nauges and Vincenzina Caputo

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