Research Bias Effects for Input and Output Decisions: An Application to U.S. Cash-Grain Farms

Duality theory and static multi-product technology have been applied to analyze aggregate agricultural data by Shumway; Weaver; and McKay, Lawrence and Vlastuin. Several studies (e.g., Antle; Binswanger; and Lopez, 1985a) have indexed technology with a time trend, but no study has attempted to investigate the effects of agricultural research, extension, and education in the multiple-output dual static framework. The objectives of this paper are (i) to assess the bias effects in cash-grain farmers' production decisions caused by public agricultural research, public extension, and farmers' schooling and (ii) to present new estimates of the shadow values of agricultural research, extension, and schooling obtained from the static dual model of agricultural production. The model is fitted to data for 42 states, pooled over Agricultural Census years 1949-74, containing the cash-grain farm type. The organization is as follows: The econometric model of production is first presented. Second, the empirical analyses, which contain a discussion of the data and empirical results, are presented. Conclusions and implications are in the final section.