INFORMATION VALUE AND RISK PREMIUM IN AGRICULTURAL PRODUCTION UNDER RISK: THE CASE OF SPLIT NITROGEN APPLICATION FOR CORN

Alban Thomas and Philippe Bontems

No 20844, 1998 Annual meeting, August 2-5, Salt Lake City, UT from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: This paper considers an agricultural production model of sequential nitrogen application under risk. Because of random shocks between successive production stages, optimal fertilization decisions depend on the magnitude of farmers' risk aversion (risk premium), and the possibility for farmers to process information (value of information). We propose a joint estimation procedure of technology and risk aversion parameters, using a structural, simulation-based econometric technique. Parameter estimates for the representative farmer's utility function allow to compute both the value of information and the risk premium for farmers. Those account together for about 30 percent of fertilizer cost for Midwest corn producers.

Keywords: Research Methods/ Statistical Methods; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 14
Date: 1998
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Downloads: (external link)
https://ageconsearch.umn.edu/record/20844/files/spthom01.pdf (application/pdf)

Related works:
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:aaea98:20844

DOI: 10.22004/ag.econ.20844

Access Statistics for this paper

More papers in 1998 Annual meeting, August 2-5, Salt Lake City, UT from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().