Title
Input Demand under Yield and Revenue Insurance
Campus Units
Economics
Document Type
Article
Publication Version
Submitted Manuscript
Publication Date
1996
Journal or Book Title
American Journal of Agricultural Economics
Volume
78
First Page or Article ID Number
416
Last Page
427
DOI
10.2307/1243713
Abstract
Previous studies disagree on the effects of insurance on fertilizer application rates. The effect of increased fertilizer on the probability of low yields primarily determines whether fertilizer and insurance are substitutes or complements. We estimate conditional distributions of corn yields to determine if the technical relationship between yields and fertilizer supports the hypothesis that insurance increases optimal application rates. Our results indicate no support for this hypothesis. At all nitrogen fertilizer rates and reasonable levels of risk aversion, nitrogen fertilizer and insurance are substitutes, suggesting that those who purchase insurance are likely to decrease nitrogen fertilizer applications.
Recommended Citation
Babcock, Bruce A. and Hennessy, David A., "Input Demand under Yield and Revenue Insurance" (1996). Economics Publications. 531.
https://lib.dr.iastate.edu/econ_las_pubs/531
Comments
This working paper was published as Babcock, Bruce A. and David A. Hennessy, "Input Demand under Yield and Revenue Insurance," American Journal of Agricultural Economics 78 (1996): 416–427, doi:10.2307/1243713.