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The dynamic feedback problem in regional agricultural production response or planning models can be divided into two parts. One part is intertemporal dynamic feedback which involves the time-dating relationship between production response and price as a lagged phenomenon. The other part of the problem involves changing the aggregation of subgroups over time. This paper suggests including a first order Markov transition probability within the model to handle the problem of aggregate changes over time. Because the model is intertemporal, it also accounts for the interrelationship among time horizons in the addition to the interrelationship among subgroups in the model. Including progressive income tax, which affects production and consumption, normally would require integer programming to handle the nonconvexity. However, this is handled here by stepwise approximation and is uniquely connected to the dynamic system of aggregation in the model.


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