Profit-Maximizing Land-Use Revisited: The Testable Implications of Non-joint Crop Production Under Land Constraint

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Abstract

This article derives new implications for the land allocation and production decisions of profit-maximizing farm-firms where production of different crops is non-joint but subject to a constraint on the total land area. These implications are observable and thus subject to empirical scrutiny. An estimable model of crop production, land allocation, and input-use decisions is derived that permits joint production and enables the implications of non-joint but land-constrained production to be tested. This may improve econometric estimates of cross-price elasticities of supply by linking models of land use and production decisions, and allowing non-jointness to be imposed where appropriate.

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