The Structure of Production and the Derived Demand for Inputs in Canadian Agriculture

Abstract The evidence suggests that an aggregate cost function and, hence, an aggregate production function for Canadian agriculture exists. Furthermore, growth in Canadian agriculture has been primarily associated with economies of scale rather than with factor‐augmenting technical change. A nonhomothetic dual cost function is used to derive explicitly the system of four input demand equations (labor, capital, land and structures, and intermediate inputs) using time‐series data for the period 1946–77. Estimates of the own‐price elasticities and of the Hicks‐Allen elasticities of substitution among the input pairs are also provided.