A SYSTEM APPROACH TO MODELLING SUPPLY EQUATIONS IN AGRICULTURE

Abstract

A multinomial logit model is a useful approach in the study of the allocation of a fixed resource between alternative uses. Here a geometric mean form of the system is presented and a number of theoretical and empirical issues are explored. In particular, its performance is compared with the use of double logarithmic equations estimated separately. As an illustration of the methodology, an allocation model of UK cereals area is specified and estimated in both static and dynamic forms.