Aggregation of data and profit maximization in Mexican agriculture
Nonparametric support for two important hypotheses relevant to econometric model specification is examined. Results of various nonparametric tests for behavioural objective and aggregation level of Mexican agricultural production data are reported. The evidence does not refute the hypothesis that producers behave collectively as though they are a price-taking, profit-maximizing firm. The empirical results also support exhaustive aggregation of input categories. Aggregation possibilities among outputs are fewer and are highly sensitive to the rejection criterion.
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