Economies of density versus natural advantage: Crop choice on the back forty

Thomas J. Holmes, Sanghoon Lee

Research output: Contribution to journalArticlepeer-review

14 Scopus citations

Abstract

We estimate the factors determining specialization of crop choice at the level of individual fields, distinguishing between the role of natural advantage (soil characteristics) and economies of density (scale economies achieved when farmers plant neighboring fields the same). Using rich geographic data from North Dakota, including new data on crop choice collected by satellite, we estimate a model of how a farmer plants adjacent fields under the farmer's control. We find planting decisions on a field are heavily dependent on the soil characteristics of adjacent fields. Through this relationship, we back out the structural parameters of economies of density.

Original languageEnglish (US)
Pages (from-to)1-19
Number of pages19
JournalReview of Economics and Statistics
Volume94
Issue number1
DOIs
StatePublished - 2012

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