Crop choices in micro-econometric multi-crop models: modelling corners, kinks and jumps

Obafèmi Philippe Koutchadé, Alain Carpentier and Fabienne Femenia

No 20-09, Working Papers SMART from INRAE UMR SMART

Abstract: Null crop acreages raise pervasive issues when modelling acreage choices with farm data. We revisit these issues and emphasize that null acreage choices arise not only due to binding non-negativity constraints but also due to crop production fixed costs. Based on this micro-economic background, we present a micro-econometric multi-crop model that consistently handles null acreages and accounts for crop production fixed costs. This multivariate endogenous regime switching model allows for specific crop acreage patterns, such as multiple kinks and jumps in crop acreage responses to economic incentives, that are due to changes in produced crop sets. Currently available micro-econometric multi-crop models, which handle null acreages based on a censored regression approach, cannot represent these patterns. We illustrate the empirical tractability of our modelling framework by estimating a random parameter version of the proposed endogenous regime switching micro-econometric multi-crop model with a panel dataset of French farmers. Our estimation and simulation results support our theoretical analysis, the effects of crop fixed costs and crop set choices on crop acreage choices in particular. More generally, these results suggest that the micro-econometric multi-crop model presented in this article can significantly improves empirical analyses of crop supply based on farm data.

Keywords: acreage choice; crop choice; endogenous regime switching; random parameter models (search for similar items in EconPapers)
JEL-codes: C13 C15 Q12 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2020
New Economics Papers: this item is included in nep-agr and nep-ecm
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http://ageconsearch.umn.edu/record/307209 (application/pdf)

Related works:
Working Paper: Crop choices in micro-econometric multi-crop models: modelling corners, kinks and jumps (2020)
Working Paper: Crop choices in micro-econometric multi-crop models: modelling corners, kinks and jumps (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:rae:wpaper:202009

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