Agro-Industrial Processing and Agricultural Pricing Under Uncertainty

Mark Gersovitz ()

The Review of Economic Studies, 1986, vol. 53, issue 1, 153-169

Abstract: Processing domestically available materials for export has intuitive appeal, e.g. if transport costs are reduced. Uncertainty in the supply of the raw material can be a crucial factor. The theoretical model of this paper shows how to choose the optimal processing capacity and, relatedly, the optimal price to pay producers of the input. Issues include: decision makers' preferences; sources and nature of uncertainty; availability of inputs to produce the raw material; and technology and costs of processing. Econometric estimates of the climate-yield relation are used to simulate these decisions for the case of Senegalese groundnut processing.

Date: 1986
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:53:y:1986:i:1:p:153-169.

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