Conference name, dates, place

International Conference on Contemporary Development Issues in Ethiopia, August 16-18, 2001, Kalamazoo, Michigan

Document Type


Presentation Date



The main purpose of this study is to examine the responsiveness of peasant farmers to changes in price and non-price factors. To this end, quadratic production and restricted profit functions are fitted to farm-level survey data from Ethiopia. The results indicate that farmers respond significantly to price incentives, but the effect of prices on output supply and fertilizer demand is negligible. The most important finding is that non-price factors are far more important in affecting production and resource use than price incentives. The results underscore the need to strengthen market incentives through effective policies that will improve farmers’ access to land and credit, public investment in roads and irrigation. The results are robust to whether primal or dual approach is used to estimate elasticities.