Separability in farm-household economics: an experiment with linear programming

The assumption of separability between farm-household production and consumption facilitates analysis, but entails several important restrictions. The implications of assuming separability are discussed here in relation to the modelling of a representative Tongan farm-household. Econometric estimation of household demand is coupled with a linear programming (LP) model of farm-household production. When analysing consumer demand, separable farm-household economics is undoubtedly preferable to ignoring the production/ consumption linkages entirely. However, the restrictions which must be imposed on the production side of the separable model are such that a realistic LP solution is unlikely to be obtained. This is likely to be a major deterrent to adopting the separable approach for studies in which the main focus is on production rather than consumption.

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Journal Article
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Agricultural Economics: The Journal of the International Association of Agricultural Economists, Volume 10, Issue 2
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 Record created 2017-04-01, last modified 2017-10-18

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