American Journal of Agricultural Economics · 1990 · 111 citations · 8 references
EconomicsCalifornia Rice FarmsEngineeringApplied EconomicsAgricultural ImpactSurvey DataCost AllocationAgricultural EconomicsCost EconomicsEconometricsEconomic AnalysisBusinessAgricultural SystemAgricultural ManagementAgricultural HistoryNonparametric ApproachAgricultural EfficiencyPricing Policy
The study develops a nonparametric method for expenditure‑constrained profit maximization. It constructs deterministic frontier profit functions with and without expenditure constraints, uses foregone profit as dual evidence, and applies the approach to California rice farm survey data. The method produces individual performance evaluations, showing that 17 of 82 surveyed farms suffer profit loss due to expenditure constraints.
Abstract A nonparametric approach to expenditure‐constrained profit maximization is developed. A deterministic frontier profit function is constructed with and without expenditure constraints. Foregone profit is used as dual evidence for the existence of expenditure constraints. Individual evaluations on performance and expenditure constraints are produced. Empirical analysis is based on survey data for California rice farms. Seventeen of the eighty‐two surveyed farms experience profit loss as a result of expenditure constraints.
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