The Price Responsiveness of U.S. Corn Yields

Abstract

Production economics theory shows that the pro fit-maximizing output of a commodity depends, among other things, upon product and input prices. Supply functions consistent with this theory have been estimated for many agricultural crops both in the United States and elsewhere. However, the biological nature of the production process, the time lags involved between planting and harvest, and the generally extensive use of land and climate leads naturally to the separation of total crop production into acreage and yield components. Typically, acreage is viewed as the major decision variable with respect to input and output prices. Per acre yields are generally regarded as dependent upon technological trends, weather, and other more or less noneconomic influences. The recent work by Perrin and Heady is a good example of this approach. Only a little literature exists on attempts to measure the price responsiveness of crop yields (Guise, Hee, Krishna), although some recent methodological work can be found (Whitaker). This note concerns the price responsiveness of U.S. corn yields when both output and input prices are considered.