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The Double Hurdle Model in the Presence of Fixed Costs

Authors: Garth J. Holloway; Christopher B. Barrett; Simeon K. Ehui;

The Double Hurdle Model in the Presence of Fixed Costs

Abstract

We present a model of market participation in which the presence of nonnegligible fixed costs leads to non-zero censoring of the traditional double-hurdle regression. Fixed costs arise when household resources must be devoted a priori to the decision to participate in the market. These costs - usually a cost of time - motivate two-step decision-making and focus attention on the minimum-efficient scale of operations (the minimum amount of milk sales) at which market entry becomes viable. This focus, in turn, motivates a non-zero-censored Tobit regression estimated through routine application of Markov chain Monte Carlo Methods.

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Powered by OpenAIRE graph
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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
2
Average
Average
Average
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