The Economics and Econometrics of Damage Control

13 Pages Posted: 31 Mar 2020

See all articles by Atanu Saha

Atanu Saha

Micronomics Inc.

C. Richard Shumway

Washington State University

Arthur Havenner

University of California, Davis

Date Written: August 1997

Abstract

Concern for the potentially harmful side effects of agricultural chemical inputs, especially pesticides, highlights the need to accurately determine the economic levels of their use. We consider three model specification issues: interaction of direct production inputs with damage control inputs in damage abatement, justification for a priori exclusion of production inputs from the abatement function, and the motivations and consequences of alternative stochastic specifications. Empirical analysis using farm‐level data shows that misspecification of the stochastic element in the production function can overestimate the marginal physical productivity of pesticides and grossly underestimate the responsiveness of demand to increases in pesticide prices.

Keywords: damage control, pesticide usage, stochastic production, yield variability, Q120, Q160, Q210

Suggested Citation

Saha, Atanu and Shumway, C. Richard and Havenner, Arthur, The Economics and Econometrics of Damage Control (August 1997). American Journal of Agricultural Economics, Vol. 79, Issue 3, pp. 773-785, 1997, Available at SSRN: https://ssrn.com/abstract=3563709 or http://dx.doi.org/10.2307/1244419

Atanu Saha (Contact Author)

Micronomics Inc. ( email )

Twenty-Fifth Floor
400 South Hope Street
Los Angeles, CA 90071-2826

C. Richard Shumway

Washington State University

Wilson Rd.
College of Business
Pullman, WA 99164
United States

Arthur Havenner

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

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