AGRICULTURAL RESEARCH EXPENDITURES IN THE UNITED STATES: A PUBLIC GOODS PERSPECTIVE

This paper presents econometric evidence on two different public good formulations of agricultural research: pure public and joint-product models. A nested test for simultaneous equations is proposed and applied for distinguishing between the two models. The procedure is used for testing for neutrality. Using data from 1951-85, the authors illustrate the technique with two-stage least squares estimates for forty-eight U.S. states. An overwhelming number of sample states abide by the joint-product model. Price and full income elasticities are presented. Copyright 1994 by MIT Press.