Abstract
nomic an0lysis is the implication of aggregation when doing market studies. The conditions for exact aggregation under a variety of definitions and settings have been studied (Paris and Rausser, Theil). The focus of this paper is on supply response in agriculture. Several authors have studied the effects of, and tests for, differential supply response coefficients across individuals or areas when aggregating firms (e.g., Theil, p. 567). Here, these coefficients are assumed to be identical for every firm but another problem is examined when uncertainty is present. It is well documented that farmers have diverse price expectations (e.g., Bessler). The question occurs as to the effects of such different expectations on aggregate supply response. It is found that the curvature of the supply function is a crucial component of the analysis. For example, if the supply function is strictly concave, an increase in the dispersion of expectations will reduce supply in aggregate.
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