Abstract
AbstractThis paper examines the reliability of supply functions derived from empirically estimated production functions. Firm‐level supply equations are derived from production functions for selected agricultural commodities, and these are used to predict firm output and to estimate supply elasticities. The results are then compared with actual or expected output and with supply elasticities estimated directly by regression analysis of time series data. Output predictions ranged from slight under‐estimates to extreme over‐estimates of actual output, with the latter being most prevalent. The derived supply elasticities were generally higher than those obtained by direct regression analysis.
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