Program Participation and Acreage Response Functions for U.S. Corn: A Regional Econometric Analysis

Conventional methods in supply analysis have usually modeled program and non-program acreage response in a single aggregate equation. In the presence of government programs, such an approach is less preferred because it fails to distinguish the factors affecting producers' decisions to participate from the factors affecting their planting decisions. A more effective approach is to estimate producer participation response first and then relate this to program planted acreage. Nonprogram acreage response is estimated separately, and is inversely related to participant response. This article reports empirical estimates from two alternative procedures that directly address this concern. The analysis is based on regional time series data for the Cornbelt and Lake States and the Northern Plains.