Demand for Farm Tractors in the United States and the United Kingdom

Econometric studies of the demand for farm tractors in the United States and the United Kingdom are compared within a theoretical framework. The motivation behind the demand for tractor services appears to have been similar, the results being consistent with profit‐seeking behavior of farmers whose investment decisions are constrained by uncertainty and available finance. However, whereas the dominant explanatory variable in the United Kingdom has been the real price of tractors relative to agricultural wages, the dominant variable in the United States appears to have been the price of tractors relative to crop prices. In addition, in the United States farm size changes have affected the use of tractor stock and thus the demand for tractors, whereas in the United Kingdom this was not the case. An attempt is made to explain the differences in investment behavior by reference to differences in the structure of the labor force, farm size, and government agricultural price and taxation policies.