Effects of Decoupling on the Mean and Variability of Output

Posted: 29 Feb 2008

See all articles by Teresa Serra

Teresa Serra

affiliation not provided to SSRN

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics

Barry K. Goodwin

North Carolina State University

Allen Featherstone

affiliation not provided to SSRN

Abstract

The influence of inputs on output risk in the context of agricultural production decisions taken by non-risk neutral agents has been ignored by previous research assessing the effects of decoupled income support payments in a deterministic world or risk-neutral framework. We study the impacts of decoupled payments on input use and on output mean and variance. Our theoretical framework for studying agricultural producers' responses to lump sum payments allows for both output and price uncertainty and economic agents' risk attitudes. Results show the importance, in a non-risk neutral scenario, of considering the influence that economic agents have on the stochastic component of output through input use. Our empirical application uses Kansas farm-level data to illustrate the model.

Keywords: decoupling, output risk, price risk, risk preferences, Just-Pope production function

Suggested Citation

Serra, Teresa and Zilberman, David and Goodwin, Barry K. and Featherstone, Allen, Effects of Decoupling on the Mean and Variability of Output. European Review of Agricultural Economics, Vol. 33, Issue 3, pp. 269-288, 2006. Available at SSRN: https://ssrn.com/abstract=1097961 or http://dx.doi.org/10.1093/erae/jbl014

Teresa Serra (Contact Author)

affiliation not provided to SSRN

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

Barry K. Goodwin

North Carolina State University ( email )

Box 8109
324 C Nelson
Raleigh, NC 27695-8109
United States
919-515-4547 (Phone)
919-515-1824 (Fax)

Allen Featherstone

affiliation not provided to SSRN

No Address Available

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