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Abstract
In 1956, Freund introduced the analysis of price risk in a mathematical programming
framework. This paper generalizes the treatment of price risk preferences in a mathematical
programming framework along the lines suggested by Meyer (1987) who demonstrated the
equivalence of expected utility and a wide class of probability distributions that differ only
by location and scale. This paper shows how to formulate a Positive Mathematical
Programming (PMP) specification that allows the estimation of the risk preference
parameters and calibrates the model to the base data within admissible small deviations. The
PMP approach under generalized risk allows also the estimation of output supply elasticities
and the response analysis of decoupled farm subsidies that, recently, has interested policy
makers. The approach is applied to a sample of large farms. Not all farms produce all
commodities.