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Abstract
Long-run aggregate agricultural supply elasticities obtained from conventional supply functions
fitted to time series data tend to be relatively inelastic in the range of 0.1 to 0.4. I argue that these
estimates substantially understate the true long-run supply response in agriculture. Because of
the lack of international input price data, implicit output/input price ratios are estimated from a
production function assuming profit maximization. The estimation of an aggregate supply function
utilizing these price ratios yields long run aggregate supply elasticities in the range of 0.90 to
1.19. These figures are substantially larger than those obtained from conventional supply functions
fitted to time series data, but correspond closely to estimates reported in an earlier crosscountry
study that used different price data for different points in time. The results imply that
policies which distort domestic and/or world market prices of agricultural products cause greater
output distortions in both the DCs and LDCs than are predicted by the small supply elasticities
obtained from conventional supply estimation.