Subsistence Response to Market Shocks

George A. Dyer, Steve Boucher and J. Edward Taylor

No 190906, Working Papers from University of California, Davis, Department of Agricultural and Resource Economics

Abstract: Micro-economic models posit that transaction costs isolate subsistence producers from output market shocks. We integrate microeconomic models of many heterogeneous households into a general-equilibrium model and show that supply on subsistence farms may respond, in apparently perverse ways, to changes in output market prices. Price shocks in markets for staple goods are transmitted to subsistence producers through interactions in factor markets. In the case presented, a decrease in the market price of maize reduces wages and land rents, stimulating maize production by subsistence households; however, real income of subsistence households falls.

Keywords: Demand and Price Analysis; Financial Economics (search for similar items in EconPapers)
Pages: 34
Date: 2005-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://ageconsearch.umn.edu/record/190906/files/WP05-004.pdf (application/pdf)

Related works:
Journal Article: Subsistence Response to Market Shocks (2006)
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:ucdavw:190906

DOI: 10.22004/ag.econ.190906

Access Statistics for this paper

More papers in Working Papers from University of California, Davis, Department of Agricultural and Resource Economics Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().