AN EMPIRICAL-MODEL OF ASSET REPLACEMENT IN DAIRY PRODUCTION

Throughout the US dairy farm industry, observed rates of dairy cow rep lacement consistently exceed the rates prescribed as optimal by dairy economists. We attempt to uncover the causes of this discrepancy by es timating a series of dynamic discrete choice models of dairy cow repla cement using historical farm-level data. We also advance the methods u sed to estimate dynamic discrete choice models by demonstrating how or thogonal polynomial projection methods can be effectively combined wit h standard maximum likelihood techniques to estimate structural models of dynamic decision making.