ABSTRACT
This chapter presents an econometric model that accounts for the different economic structures of farmers' choice functions on outputs and inputs when some outputs are not produced. It employs the methodology of endogenous switching in a multivariate econometric model. The chapter has the following organization. The first section presents a brief discussion of the economic model. The second section presents the econometric model for dealing with multiple corner solutions in a system of equations. The third section contains procedures applicable for estimating the model inexpensively. The combinations of corner and interior solutions for endogenous variables are the source of multiple economic and econometric structures for agricultural supply and demand equations. When least-squares econometric methods are applied to estimate a traditional set of supply and demand or profit share equations under some conditions, the estimator is statistically inconsistent.
