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Abstract

In this paper we will try to address two questions. First, are farmers using the level of nitrogen that would maximize profits, and second, does the profit maximizing level of nitrogen use exceed the social optimum? In the latter case, we determine the optimal level of nitrogen use for continuous corn when the farmer must try to maintain the groundwater quality level at 10 ppm (the EPA safe drinking water standard). We conclude with recommendations concerning how to achieve the social optimum level of nitrogen use.

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