Unconditional factor demands and supply response for livestock products: A farm-level analysis of the Southern Rangelands of Kenya

This paper evaluates output supply and input factor demands for livestock products in the Southern rangelands of Kenya. A flexible translog profit function that permits the application of the primal approach to the output supply and factor demand analysis was estimated using household-level data. The results indicate that the own-price elasticities of supply for cattle, sheep and goats were all positive. The own-price elasticities for the supply of sheep and goat products were elastic, while the own-price elasticities for the supply of cattle products wasinelastic. Cross-price and scale elasticities were found to be within the inelastic range in all cases, with goat production complementing both cattle and sheep production. All factor input demand elasticities for cattle, sheep and goats had the expected negative sign and were inelastic. These results offer a valuable opportunity for the development of pro-pastoral price policies that reduce factor market imperfections and thus enhance livestock productivity in the rangelands of Kenya.

Adjustment costs and factor demand: New evidence from firms’ real estate*

We study corporate real estate frictions and its effect on firm dynamics and labour demand. We build and simulate a general equilibrium model with heterogeneous firms that predicts the response of firms to a productivity shock in the presence of fixed adjustment costs on real-estate. Using a large firm-level database merged with local real estate prices, we then exploit variations in the tax on capital gain to document a causal effect of adjustment costs on firms’ labour demand and derive new results on the causes and implications of firms’ local relocation.

Dynamic factor demand in the Japanese manufacturing industry

PurposeThis study investigates the dynamic production structure of the Japanese manufacturing industry by using the adjustment cost approach. The study is to shed some light on the unique dynamic structure of the Japanese manufacturing industry. The study attempts to help design and predict industrial policies that are implemented to enhance domestic investments by the Japanese government.Design/methodology/approachThis study obtains a system of dynamic factor demand and output supply equations by applying the dual approach to the intertemporal value function as represented by the Hamilton–Jacobi equation. By using industrial panel data for 1973–2012 of the Japanese manufacturing industry, the study estimates the system of the behavioral equations and corresponding elasticities. The study uses hypothesis tests and dynamic elasticities to investigate the dynamic structure of the Japanese manufacturing industry.FindingsEstimation results show that labor and capital are quasi-fixed variables that adjust about 0.2 percent annually to the long-run optimum levels. Estimated adjustment rates are very slow as often presumed about the Japanese manufacturing industry, which uses lifetime employment practice and slow decision-making process in investment decisions. The results also show that output supply and factor demand elasticities vary greatly depending on time horizon. Factor demand increases when its own price increases in the short run, suggesting that factor adjustment is mostly determined factor prices in the past due to sluggish factor adjustment. However, factor demand becomes a normal downward-sloping curve in the long run as factor adjustment gets completed.Originality/valueJapanese manufacturing firms hire employees through lifetime contract to exploit the benefits of dynamic learning-by-doing and execute investments carefully considering all the possible impacts. Under the strategy, adjustment costs for changing workers and capital stock are minimized. Dynamic adjustment model is expected to shed some light on the unique dynamic structure of the Japanese manufacturing industry. However, researches regarding the dynamic factor adjustment of the Japanese manufacturing industry are hard to find. This study is expected to fill the research vacuum.

Livestock product supply and factor demand responsiveness

Despite there being incredible challenges in enhancing livestock development in Kenya, this article isolates product supply and factors input demand responsiveness as the main constraints facing the smallholder. A flexible-Translog profit function permits the application of dual theory in the analysis of livestock product supply and factor demand responsiveness using farm-level household data. The results indicate that own-price elasticities were elastic for cattle, while goat and sheep were inelastic. Cross-price and scale elasticities were found to be within inelastic range in all cases, with the goat being a preferred substitute for cattle. All factor inputs demand elasticities were inelastic with the exception of elastic cattle output prices and labour cost. Thus, the recommended policy option would be supportive pro-pastoral price policies, enhanced investment in pastureland improvement and an increasing wage rate, since these assume key significance in improving the livestock production/marketing.