EconPapers    
Economics at your fingertips  
 

Price Expectations and Supply Response

Carlos Arnade and Joseph Cooper ()

No 150490, 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association

Abstract: Price in agricultural supply equations is usually the expected price. In general, models of agricultural supply response assume that their representation of producer expectations is correct. If this assumption is wrong, the supply response parameter will have embodied within it an estimate of the expected price distortion, biasing the estimated parameter. Furthermore, no effort has been made in existing models to allow for heterogeneous price expectations. In almost every supply model, one price estimate is used to represent the price expectations of hundreds or thousands of producers, which could masks a wide range behavior among heterogenous producers. Rather than assuming the model’s representation of producer expectations is correct, the goal of this paper is to use revealed producer behavior to assist in the estimation of producer’s expected prices. To explicitly address producers’ formation of the expected price, this study jointly estimates the supply equation and the price expectation equation. The empirical application is a pooled time-series cross-section data analysis of U.S. wheat and corn supply data at the county level.

Keywords: Agricultural Finance; Demand and Price Analysis (search for similar items in EconPapers)
Pages: 31
Date: 2013
New Economics Papers: this item is included in nep-agr
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/150490/files/arncoper.pdf (application/pdf)

Related works:
Working Paper: Price Expectations and Supply Response (2013) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea13:150490

DOI: 10.22004/ag.econ.150490

Access Statistics for this paper

More papers in 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. from Agricultural and Applied Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().

 
Page updated 2025-03-22
Handle: RePEc:ags:aaea13:150490