MULTIPRODUCT PRODUCTION CHOICES AND POLICY RESPONSE

A restricted profit function model of California agriculture is specified and estimated subject to prior information provided by economic theory. Symmetry, homogeneity, and convexity of the profit function are maintained in the estimation. Parameter estimates and elasticities are presented for four input and 10 output equations. Tests of the hypotheses of nonjointness in inputs and Hicks-neutral technical change in variable inputs and outputs are rejected. The impacts of decoupling agricultural program payments are examined.