Agricultural inputs demand in Mexico: a dual approach
DOI:
https://doi.org/10.29312/remexca.v3i1.1480Keywords:
credit, elasticities, translog cost function, complementary inputs, substitute inputsAbstract
In order to analyze the agricultural production in Mexico, a dual approach using a translog cost function was performed to derive an inputs demand system of eight equations (labor, tractors, threshers, commercial bank credit, credit development banks, nitrogen fertilizers, phosphate fertilizers and potassic fertilizers). Time series data were used for the period 1970-2006, for prices and quantities of inputs and, the actual agricultural GDP as the product. In order to characterize the complementarity relations or substitution that the inputs store between them, the Allen- Uzawa elasticity of substitution between pairs of inputs was used finding that, the demand for the studied inputs is inelastic on its price. From the set of analyzed inputs, the costs of wages constitute the largest share (58.62%). In order to meet the demand for an agricultural output growth in 2010, commercial and development banks should increase the loans in 2.28 and 0.72% respectively. The demand for inputs: labor and tractors, development credit bank and fertilizers resulted to behave as complementary; while the demand for inputs: labor and phosphate fertilizers, tractors and threshers, development credit banks and commercial credit banks behaved as substitutes.
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