Dealing With Corner Solutions In Multi-crop Microeconometric Models: An Endogenous Switching Regime Approach With Regime Fixed Costs

Obafèmi Philippe Koutchade, Alain Carpentier and Fabienne Feminia

No 260832, 2017 International Congress, August 28-September 1, 2017, Parma, Italy from European Association of Agricultural Economists

Abstract: We propose an Endogenous Regime Switching model specifically designed for modelling acreage choices with corner solutions featuring regime fixed costs. Contrary to models based on censored regression systems, this model is fully coherent from an economic point of view, by construction. To illustrate its empirical tractability, we estimate a random parameter version of this model for a panel dataset of French arable crop producers. Our results show that the model fits well the data, the regime fixed cost matter, and that the decision to produce a crop or not play a major role in the acreage responses to economic incentives.

Keywords: Production; Economics (search for similar items in EconPapers)
Pages: 24
Date: 2017-08-29
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Working Paper: Dealing with corner solutions in multi-crop micro-econometric models: An endogenous switching regime approach with regime fixed costs (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:eaae17:260832

DOI: 10.22004/ag.econ.260832

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