Economies of Density versus Natural Advantage: Crop Choice on the Back Forty

Thomas J. Holmes and Sanghoon Lee
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Thomas J. Holmes: University of Minnesota, Federal Reserve Bank of Minneapolis, and NBER

The Review of Economics and Statistics, 2012, vol. 94, issue 1, 1-19

Abstract: We estimate the factors determining specialization of crop choice at the level of individual fields, distinguishing between the role of natural advantage (soil characteristics) and economies of density (scale economies achieved when farmers plant neighboring fields the same). Using rich geographic data from North Dakota, including new data on crop choice collected by satellite, we estimate a model of how a farmer plants adjacent fields under the farmer's control. We find planting decisions on a field are heavily dependent on the soil characteristics of adjacent fields. Through this relationship, we back out the structural parameters of economies of density. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2012
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Working Paper: Economies of density versus natural advantage: crop choice on the back forty (2009)
Working Paper: Economies of Density versus Natural Advantage: Crop Choice on the Back Forty (2009)
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