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Price Elasticity of the Marketed Surplus of a Subsistence Crop

1966; Volume: 48; Issue: 4 Linguagem: Inglês

10.2307/1236619

2163-6257

Jere R. Behrman,

Global trade and economics

The supply response of the marketed surplus of food grains in the agricultural sector of less-developed countries has long been a subject of debate in discussions of the effects of such policies as P.L. 480 disposals, food price regulations, and export taxes. Estimates of this response have been very few because the lack of time-series data for marketed quantities precludes direct estimation. This article presents a model for the indirect estimation of the price elasticity of the marketed surplus of a subsistence crop. The model is contrasted with an earlier model presented by Raj Krishna. The model is then applied to the case of Thai rice. In this application, some new nonlinear estimates of a Nerlovian model for the total supply response of Thai rice production are also presented and discussed. S OME economists contend that the supply response of the agricultural sector in less-developed countries is quite similar to the response in countries with high per capita incomes. Others argue that this response is perverse in the sense that increased prices result in smaller quantities. A third group maintains that institutional constraints are so limiting that no significant response to economic incentives is likely to be observed. To some degree, these different opinions have resulted from the failure to distinguish explicitly between the supply of a single crop and the supply of all crops, between total production and the marketed surplus, and between short-run and long-run responses. Even after discounting for the confusion which has resulted from the failure to make explicit such distinctions, however, considerable disagreement remains. Consequently, disputes continue over the role of agriculture in less-developed countries and over the effects