[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/isu/genstf/1990010108000010876.html
   My bibliography  Save this paper

The microfoundations of mixed system of planning and markets: some theoretical considerations and an empirical analysis of the Chinese agriculture

Author

Listed:
  • Pan, Shihua
Abstract
This study resulted in construction an econometric model for the Chinese agriculture. The model reflects the current Chinese mixed planning and market system. Related policy variables are directly included in objective function for the representative producer. In the mixed system, marginal decisions of producers are affected by state prices only if market price is uncertain. If market price is known, marginal decision rules much like those in market economies are directly applicable;Output supply and input demand equations for risk averse producers were derived from a specific utility function and a normalized quadratic profit function. The complete model includes seven outputs (grain, protein feed, other food from crop, nonfood agricultural products, bovine meat, dairy products, and other meat), two variable inputs (fertilizer and feed), two fixed inputs (land and livestock inventory), two policy variables (state grain price and state grain quota), and one time variable to reflect technical change;The two submodels for the dual system, crops and livestock, were separately estimated using annual data, 1978 to 1985. Full information maximum likelihood methods were used to estimate the system while maintaining the theoretical restrictions following from the optimal process behavior. The elasticity estimates were plausible. Model validation statistics implies satisfactory performance in the sample period for all endogenous variables;The model was used to analyze policy scenarios for the state purchase price and the state purchase quota of grain for years from 1978 to 1988. Two policy conclusions were suggested by the empirical results. First, the government should increase the state price of grain and decrease the state quota of grain if grain production is a high priority for the Chinese agricultural development. Alternatively, if the government wishes to stimulate production of other food and nonfood agricultural products, then a decrease in the state price and an increase in the state quota of grain should be adopted. Second, if the free market is treated as a residual in the state planning process, unintended price variations may have significant impacts on producer resource allocation decisions and incomes. Therefore, it is important not to ignore the free market in mixed systems, as perhaps has been the case for central planners in China.

Suggested Citation

  • Pan, Shihua, 1990. "The microfoundations of mixed system of planning and markets: some theoretical considerations and an empirical analysis of the Chinese agriculture," ISU General Staff Papers 1990010108000010876, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:1990010108000010876
    as

    Download full text from publisher

    File URL: https://dr.lib.iastate.edu/server/api/core/bitstreams/a05b4418-7fc1-4f71-8d82-f2c6d16fa9a1/content
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. J. J. McCall, 1967. "Competitive Production for Constant Risk Utility Functions," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 34(4), pages 417-420.
    2. Baxter, Nevins D & Cragg, John G, 1970. "Corporate Choice Among Long-Term Financing Instruments," The Review of Economics and Statistics, MIT Press, vol. 52(3), pages 225-235, August.
    3. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    4. William G. Brown & Bruce R. Beattie, 1975. "Improving Estimates of Economic Parameters by Use of Ridge Regression with Production Function Applications," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 57(1), pages 21-32.
    5. Blair, Roger D & Lusky, Rafael, 1977. "A Note on Random Demand and Duality under Competition," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 18(1), pages 235-240, February.
    6. Robert N. Horn, 1988. "Analysis," Challenge, Taylor & Francis Journals, vol. 31(4), pages 56-58, July.
    7. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1973. "Transcendental Logarithmic Production Frontiers," The Review of Economics and Statistics, MIT Press, vol. 55(1), pages 28-45, February.
    8. A. Ronald Gallant, 1984. "The Fourier Flexible Form," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(2), pages 204-208.
    9. Pope, Rulon D, 1980. "The Generalized Envelope Theorem and Price Uncertainty," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 75-86, February.
    10. Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
    11. Lopez, Ramon E, 1985. "Structural Implications of a Class of Flexible Functional Forms for Profit Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 593-601, October.
    12. Gallant, A. Ronald, 1982. "Unbiased determination of production technologies," Journal of Econometrics, Elsevier, vol. 20(2), pages 285-323, November.
    13. William A. Barnett, 2000. "New Indices of Money Supply and the Flexible Laurent Demand System," Contributions to Economic Analysis, in: The Theory of Monetary Aggregation, pages 325-359, Emerald Group Publishing Limited.
    14. Blackorby, Charles & Primont, Daniel & Russell, R. Robert, 1977. "On testing separability restrictions with flexible functional forms," Journal of Econometrics, Elsevier, vol. 5(2), pages 195-209, March.
    15. Lau, Lawrence J., 1978. "Applications of Profit Functions," Histoy of Economic Thought Chapters, in: Fuss, Melvyn & McFadden, Daniel (ed.),Production Economics: A Dual Approach to Theory and Applications, volume 1, chapter 3, McMaster University Archive for the History of Economic Thought.
    16. Lin, Justin Yifu, 1988. "The Household Responsibility System in China's Agricultural Reform: A Theoretical and Empirical Study," Economic Development and Cultural Change, University of Chicago Press, vol. 36(3), pages 199-224, Supplemen.
    17. Tang, Anthony M. & Stone, Bruce, 1980. "Food production in the People's Republic of China:," Research reports 15, International Food Policy Research Institute (IFPRI).
    18. Lawrence J. Lau & Pan A. Yotopoulos, 1972. "Profit, Supply, and Factor Demand Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 54(1), pages 11-18.
    19. Batra, Raveendra N & Ullah, Aman, 1974. "Competitive Firm and the Theory of Input Demand under Price Uncertainty," Journal of Political Economy, University of Chicago Press, vol. 82(3), pages 537-548, May/June.
    20. McMillan, John & Whalley, John & Zhu, Lijing, 1989. "The Impact of China's Economic Reforms on Agricultural Productivity Growth," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 781-807, August.
    21. Chambers,Robert G., 1988. "Applied Production Analysis," Cambridge Books, Cambridge University Press, number 9780521314275, September.
    22. Lau, Lawrence J., 1976. "A characterization of the normalized restricted profit function," Journal of Economic Theory, Elsevier, vol. 12(1), pages 131-163, February.
    23. Charles Blackorby & William Schworm, 1982. "Aggregate Investment and Consistent Intertemporal Technologies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 49(4), pages 595-614.
    24. Ishii, Yasunori, 1977. "On the Theory of the Competitive Firm under Price Uncertainty: Note," American Economic Review, American Economic Association, vol. 67(4), pages 768-769, September.
    25. Gallant, A. Ronald, 1981. "On the bias in flexible functional forms and an essentially unbiased form : The fourier flexible form," Journal of Econometrics, Elsevier, vol. 15(2), pages 211-245, February.
    26. Hartman, Richard, 1975. "Competitive Firm and the Theory of Input Demand under Price Uncertainty: Comment," Journal of Political Economy, University of Chicago Press, vol. 83(6), pages 1289-1290, December.
    27. Lopez, Ramon E., 1982. "Applications Of Duality Theory To Agriculture," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 7(2), pages 1-14, December.
    28. Hartman, Richard, 1976. "Factor Demand with Output Price Uncertainty," American Economic Review, American Economic Association, vol. 66(4), pages 675-681, September.
    29. Diewert, W. E., 1976. "Exact and superlative index numbers," Journal of Econometrics, Elsevier, vol. 4(2), pages 115-145, May.
    30. Diewert, W E, 1971. "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, University of Chicago Press, vol. 79(3), pages 481-507, May-June.
    31. C. Richard Shumway, 1983. "Supply, Demand, and Technology in a Multiproduct Industry: Texas Field Crops," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(4), pages 748-760.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Aradhyula, Satheesh Venkata, 1989. "Policy structure, output supply and input demand for US crops," ISU General Staff Papers 198901010800009909, Iowa State University, Department of Economics.
    2. Eswaramoorthy, K., 1991. "U.S. livestock production and factor demand: a multiproduct dynamic dual approach," ISU General Staff Papers 1991010108000010523, Iowa State University, Department of Economics.
    3. Jaouad, Mohamed, 1994. "An agricultural policy and trade model for Morocco," ISU General Staff Papers 1994010108000011483, Iowa State University, Department of Economics.
    4. Nguyen, Duong T.M. & McLaren, Keith Robert & Zhao, Xueyan, 2008. "Multi-Output Broadacre Agricultural Production: Estimating A Cost Function Using Quasi-Micro Farm Level Data From Australia," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6009, Australian Agricultural and Resource Economics Society.
    5. Kesavan, Thulasiram, 1988. "Monte Carlo experiments of market demand theory," ISU General Staff Papers 198801010800009854, Iowa State University, Department of Economics.
    6. Lence, Sergio Horacio, 1991. "Dynamic firm behavior under uncertainty," ISU General Staff Papers 1991010108000010656, Iowa State University, Department of Economics.
    7. Barnett, William A. & Serletis, Apostolos, 2008. "Consumer preferences and demand systems," Journal of Econometrics, Elsevier, vol. 147(2), pages 210-224, December.
    8. Wall, Charles A. & Fisher, Brian S., 1988. "Supply Response and the Theory of Production and Profit Functions," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-22, December.
    9. Monia Landolsi & Kamel Bel Hadj Miled, 2024. "Semi-Nonparametric Estimation of Energy Demand in Tunisia," International Journal of Energy Economics and Policy, Econjournals, vol. 14(1), pages 254-263, January.
    10. Diewert, W. E. & Wales, T. J., 1995. "Flexible functional forms and tests of homogeneous separability," Journal of Econometrics, Elsevier, vol. 67(2), pages 259-302, June.
    11. Coleman, Jane A. & Shaik, Saleem, 2009. "Time-Varying Estimation of Crop Insurance Program in Altering North Dakota Farm Economic Structure," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49516, Agricultural and Applied Economics Association.
    12. Hossain, A K M Nurul & Serletis, Apostolos, 2020. "Technical change in U.S. industries," Economic Modelling, Elsevier, vol. 91(C), pages 579-600.
    13. W. Erwin Diewert, 2022. "Duality in Production," Springer Books, in: Subhash C. Ray & Robert G. Chambers & Subal C. Kumbhakar (ed.), Handbook of Production Economics, chapter 3, pages 57-168, Springer.
    14. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    15. Douglas Fisher & Adrian R. Fleissig & Apostolos Serletis, 2006. "An Empirical Comparison of Flexible Demand System Functional Forms," World Scientific Book Chapters, in: Money And The Economy, chapter 13, pages 247-277, World Scientific Publishing Co. Pte. Ltd..
    16. Griffiths, William E. & O'Donnell, Christopher J. & Cruz, Agustina Tan, 2000. "Imposing regularity conditions on a system of cost and factor share equations," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(1), pages 1-21.
    17. Mc Quinn, Kieran, 2003. "Alternative Models of the Irish Supply Side," Research Technical Papers 2/RT/03, Central Bank of Ireland.
    18. Riedl, Arno & van Winden, Frans, 2012. "Input versus output taxation in an experimental international economy," European Economic Review, Elsevier, vol. 56(2), pages 216-232.
    19. William A. Barnett & Ikuyasu Usui, 2007. "The Theoretical Regularity Properties of the Normalized Quadratic Consumer Demand Model," International Symposia in Economic Theory and Econometrics, in: Functional Structure Inference, pages 107-127, Emerald Group Publishing Limited.
    20. repec:zib:zbmahj:v:2:y:2022:i:1:p:34-39 is not listed on IDEAS
    21. Hideyuki Mizobuchi & Valentin Zelenyuk, 2018. "Measuring Productivity by Quadratic-mean-of-order-of-r Indexes," CEPA Working Papers Series WP062018, School of Economics, University of Queensland, Australia.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:isu:genstf:1990010108000010876. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Curtis Balmer (email available below). General contact details of provider: https://edirc.repec.org/data/deiasus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.