Estimates of the elasticity of the supply of bananas in Puerto Rico
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Keywords

Banana trade--Puerto Rico

How to Cite

Cortés, M., & Villagómez, R. (2005). Estimates of the elasticity of the supply of bananas in Puerto Rico. The Journal of Agriculture of the University of Puerto Rico, 89(3-4), 181-192. https://doi.org/10.46429/jaupr.v89i3-4.1039

Abstract

In this study the elasticity of the area of banana plantations related to deflated lag prices was estimated. The result of the elasticity was 0.01. The expectation coefficient ßwas 0.36. The expectation coefficient and the estimated price elasticity were estimated (expected price, P*). The expectation coefficient obtained was 0.36, all of which suggests that farmers consider past prices when they are planning their plantings. In this particular situation a six-year lag was considered. The elasticity of the planted area related to the expected prices was estimated at -0.22. The results of the analysis considering the expected price (P*) were a little higher; nevertheless, these results reveal that the area is not sensitive to a change in banana prices. These results are similar to results in other countries and in other agricultural goods. The area planted in banana could be related to the price of coffee more than to the function of the market tendencies of supply and demand as it would be expected. Other factors, such as changes in preferences and substitute products, also affect the planted area.

https://doi.org/10.46429/jaupr.v89i3-4.1039
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