Implicit Prices and Recursivity of Agricultural Households' Decision

This paper analyses the recursivity of consumption and production decisions of agricultural households. This paper demonstrates that a necessary and sufficient condition of recursivity is that implicit prices of goods that are produced by a household or used as inputs are equal to market prices. This result emphasizes the household specific nature of the recursivity property. For any sample, recursivity could hold for only a fraction of the observations. An empirical illustration, focusing upon the equality of implicit and market prices of family labour, is undertaken using data from the Cote d'Ivoire. Results indicate that non recursivity is a common case in this sample.