Innovation in Estimation of Revenue and Cost Functions in PMP Using FADN Information at Regional Level

The objective of this paper is to present an evolution of PMP model suitable to estimate the revenue function and to provide price elasticity due to the variation of subsidies at farm level, especially if they are decoupled. This problem arises when individual data of farm households in a given region, coming from FADN, are used for implement PMP models finalized to policy analysis. This paper presents the theoretical background of the proposed innovations and empirical evidence on the basis of a sample of farms included in FADN database in Italy.