Using market share and multiplicative competitive interaction models to explain structural change in the German agricultural sector

We use a Multiplicative Competitive Interaction (MCI) model, a popular approach in marketing research, to explain the change in farm specialization over time. The change in farm specialization is measured by the variations of the Standard Gross Margin (SGM) shares. The model is applied to the German Farm Accountancy Data (FADN) using the years 1990 until 2008. Therefore, a MCI model was developed using various lagged explanatory variables, evaluated using a forward selection based on log likelihood ratio test. Using an in-sample forecast the approach correctly predicts 99% of the farm specialization development.