TECHNICAL CHANGE AND THE STRUCTURE OF PRODUCTION - A NONSTATIONARY MARKOV ANALYSIS

Elasticities of farm structure and of the probabilities of movement fr om one size of farm to another are derived and calculated from a Marko v model. They ale used to examine the impact of technical change on th e size distribution of farms over time. imperfectly observed aggregate data are used to estimate non-stationary transition probabilities whi ch characterise movement in farm size. The model examines the structur e of small (one to 29 cows), medium (30 to 49 cows), large (50 to 99 c ows), and very large (100 or move cows) Wisconsin dairy farms during t he 1980s and early 1990s. Findings confirm the nonstationary nature of the evolution in farm structure.