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2. Information value and risk premium in agricultural production under risk: The case of split nitrogen application for corn
- Collection:
- Agricultural Communications Documentation Center (ACDC)
- Contributers:
- Thomas, A. (author) and Bontems, P. (author)
- Format:
- Conference paper
- Publication Date:
- 1995-09
- Published:
- USA
- Location:
- Agricultural Communications Documentation Center, Funk Library, University of Illinois Box: 107 Document Number: C10136
- Notes:
- search from AgEcon. http://agecon.lib.umn.edu, American Agricultural Economics Association Annual Meeting, August 2-5, 1998, Salt Lake City. 14 p., This paper considers an agricultural production model of sequential nitrogen application under risk. Because of random shocks between successive production stages, optimal fertilization decisions depend on the magnitude of farmers' risk aversion (risk premium), and the possibility for farmers to process information (value of information). We propose a joint estimation procedure of technology and risk aversion parameters, using a structural, simulation-based econometric technique. Parameter estimates for the representative farmer's utility function allow to compute both the value of information and the risk premium for farmers. Those account together for about 30 percent of fertilizer cost for Midwest corn producers.
3. The impact of information on land development: a dynamic and stochastic analysis
- Collection:
- Agricultural Communications Documentation Center (ACDC)
- Contributers:
- Batabyal, A.A. (author)
- Format:
- Research paper
- Publication Date:
- 1995-09
- Published:
- USA
- Location:
- Agricultural Communications Documentation Center, Funk Library, University of Illinois Box: 107 Document Number: C10135
- Notes:
- search from AgEcon., ERI Study Paper 95-13. September 1995 10 pages; Adobe Acrobat PDF 57K bytes, In a two-period model, economists such as K.J. Arrow, A.C. Fisher, and C. Henry, have shown that when development is both indivisible and irreversible, a developer who ignores the possibility of obtaining new information about the outcome of such development will invariably underestimate the benefits of preservation and hence favor development. In this note, I extend the AFH analysis in two directions. I model the land development problem in a dynamic framework, explicitly specifying an information production function. In such a setting, I then ask and answer the question concerning when development should take place. JEL Classification: D82, Q20 Key words: development, dynamic, information, uncertainty Forthcoming in Journal of Environmental Management