Input Substitution, Productivity Performance and Farm Size

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• 作者：Yu Sheng ; Alistair Davidson ; Keith Fuglie and Dandan Zhang
• 刊名：Australian Journal of Agricultural and Resource Economics
• 出版年：2016
• 出版时间：July 2016
• 年：2016
• 卷：60
• 期：3
• 页码：327-347
• 全文大小：269K
• ISSN：1467-8489

文摘

This paper develops a theoretical model to examine the relationship between the input elasticity of (technical) substitution and both farm total factor productivity and size. In the presence of ongoing technical change and its factor bias, the ‘income effect’ arising from farms' cost minimising behaviour enables them to increase productivity by saving inputs or, through the dual equivalent, enlarging farm size. As such, farms with higher elasticities of substitution tend to grow larger and become more productive, which provides a new mechanism through which farm heterogeneity in productivity growth can be examined. Empirical evidence from Australian broadacre agriculture supports this theory and points to important policy implications.