Technical Change and the Structure of Production: A Non-stationary Markov Analysis.

Elasticities of farm structure and of the probabilities of movement from one size of farm to another are derived and calculated from a Markov model. They are used to examine the impact of technical change on the size distribution of farms over time. Imperfectly observed aggregate data are used to estimate non-stationary transition probabilities which characterise movement in farm size. The model examines the structure of small (one to 29 cows), medium (30 to 49 cows), large (50 to 99 cows), and very large (100 or more cows) Wisconsin dairy farms during the 1980s and early 1990s. Findings confirm the non-stationary nature of the evolution in farm structure. Copyright 1995 by Oxford University Press.