System (9) has four blocks. The first is a set of two equations determining MV adoption. State yield ratios, Y*, etc., and technology (research), T*, variables are determinants of adoption. The infrastructure and skill variables, I, are included in this (and other blocks) as well. The rice trait availability data (TR*)are also included.
The second block is the acreage price response block. Each equation in this block includes all (endogenous) MV variables, all prices and all research variables (T) as well as I and F variables. Cross equation restrictions hold for the MV variable (e.g. 9 A1/9 MV2 = 9 A2/9 MV1), for the price variables, and for the research variables. Acreage decisions are treated as subject to Nerlovian cost adjustment (At_1).
The third block includes the variable input demand equations.
The fourth block includes the yield equations. These include only the 'own' areas, MV, price and research variables. They also include the I variables and weather variables W. For rice the trait values are also included.
This system then constitutes a complete supply-factor demand system based on profit maximization in MV adoption decisions, acreage decisions and yield (supply) outcomes. One can compute the implicit shadow prices for the policy variables, I, T, Fand TR (traits). These are evaluated as impacts on farm revenue.
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