Numerical Estimation of Agricultural Supply Functions - A Micro Economic Approach based on Mathematical Programming

This paper describes a cost function approach to modelling production and resource use at the level of the individual farm firm. The procedure for deriving the supply function using mathematical programming under fairly general condition of a convex input set is shown, and the model is demonstrated. It is suggested that the model is used as the basic building block in agricultural sector models, the advantage being that the technology is modelled as a production frontier providing better opportunities for modelling input and output substitution.