PNNL

Abstract

This paper compares the theoretical specification of production and technical change across the partial equilibrium (PE) and computable general equilibrium (CGE) models of the global agricultural and food system included in the AgMIP model comparison study. The two modeling approaches have different theoretical underpinnings concerning the scope of economic activity they capture and how they represent technology and the behavior of supply and demand in markets. This paper focuses on their different specifications of technology and supply behavior, comparing their theoretical and empirical treatments. While the models differ widely in their specifications of technology, both within and between the PE and CGE classes of models, we find that the theoretical responsiveness of supply to changes in prices can be similar, depending on parameter choices that define the behavior of supply functions over the domain of applicability defined by the common scenarios used in the AgMIP comparisons. In particular, we compare the theoretical specification of supply in CGE models with neoclassical production functions and PE models that focus on land and crop yields in agriculture. In practice, however, comparability of results given parameter choices is an empirical question, and the models differ in their sensitivity to variations in specification. To illustrate the issues, sensitivity analysis is done with one global CGE model, MAGNET, to indicate how the results vary with different specification of technical change, and how they compare with the results from PE models.