Agriculture - AIM-Hub
|Institution||National Institute for Environmental Studies (NIES), Japan, .|
|Solution concept||General equilibrium (closed economy)|
There are three cereal sectors, three other aggregated crop sectors, and two aggregated livestock sectors in AIM/CGE. Producers are assumed to maximize profits subject to the availability of appropriate technology (production functions) and the price of inputs. The first-order conditions for profit maximization essentially define the factor demands and output supply behavior of producers. The production structure is the same as for other industrial sectors except for the treatment of land input. The land input is assumed by multiplying output by a coefficient. However, in some cases, this fixed coefficient approach makes it difficult to solve the program if the land constraint is substantially critical. Therefore, the term related to output price elasticity is assumed. If price elasticity is very small (e.g., 0.05) and the model results can be interpreted, the land input is treated almost as a Leontief-type input.