Discontinuous Policy and Distorted Choices: the Case of Acreage Control

Robert Weaver

No 291354, Staff Paper Series from Pennsylvania State University, Department of Agricultural Economics and Rural Sociology

Abstract: Past acreage response studies have failed to recognize that government control policies have typically introduced taxes and subsidies which are discontinuous over acreage planted. The nature of this discontinuity is reviewed and its impact on profit maximizing choice analyzed. A general model suitable for econometric estimation which would accommodate this discontinuity in policy is introduced. The effect of the discontinuity is to preclude ordinary least squares estimation. An extension of Tobin's maximum likelihood method is introduced to resolve the estimation complications.

Keywords: Agricultural and Food Policy; Land Economics/Use (search for similar items in EconPapers)
Pages: 12
Date: 1978-10
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Discontinuous Policy and Distorted Choices: The Case of Acreage Control (1979)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:psusps:291354

DOI: 10.22004/ag.econ.291354

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