Microdata analysis of Japanese farmers’ productivity: Estimating farm heterogeneity and elasticity of substitution among varieties

Modern theories of trade and economic geography consider the role product differentiation under monopolistic competition in manufacturing, assumption that agriculture produces homogeneous goods. By contrast, agribusiness studies examine case active high-productivity entrepreneurs who pursue by creating new products. To reconcile these two contradicting views agriculture, we incidence farm heterogeneity differentiation. We use microdata Japanese farmers to estimate their total factor productivity find is relatively low fruit, rice, greenhouse horticulture farming sectors, high livestock poultry sectors. degree elasticity substitution vegetable upland field sectors around three, which similar findings earlier studies.