Non-Parametric Production Frontier in a Computable Partial Equilibrium Model

 
PIIS042473880006779-5-1
DOI10.31857/S042473880006779-5
Publication type Article
Status Published
Authors
Occupation: Leading Researcher
Affiliation:
Laboratory of financial and industrial integration mechanisms
Central Economics and Mathematics Institute of Russian Academy of Science
Address: Moscow, Nakhimovsky prospekt, 47
Journal nameEkonomika i matematicheskie metody
EditionVolume 55 Issue 4
Pages104-116
Abstract

A computable mathematical model of partial equilibrium is developed, which supply functions are derived at the run-time from the data that define suppliers' production frontiers in a non-parametric form. Unlike the common computable partial equilibrium models, the proposed model avoids sophisticated estimations of supply function parameters, achieves better credibility of the model outcome. Such a model allows a researcher to study the response of markets to the varying amount of resources as well as the production technologies and climate conditions, avoiding assumptions (which are difficult to test) on how such factors affect the supply functions. For the purpose of ensuring acceptable computational properties of the model, the non-parametric production frontier is represented by simultaneous inequations derived from the duality theory, instead of the common representation as a linear program. Furthermore, the paper presents the application of the developed model to the analysis of price change in the cattle and poultry, milk and grain markets in Federal subjects of the Russian Federation (within 2013) in the scenario that partially activates the current reserves for improving territorial and industrial structure of the Russian agriculture. The model specification considers transport links between the Federal subjects, natural agricultural zones and uncertainty.

 

Keywordscomputable model, partial equilibrium, policy analysis, duality theory, non-parametric production frontier, markets of agricultural products
Received21.10.2019
Publication date16.12.2019
Number of characters31129
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