Monday, January 31, 2011

Market distance and wheat yields

I am still having problems sleeping because I can't understand why we have some positive signs for distance to market. The theory is that the sign should be negative, meaning that the further the farm is from the market, the lower the rent. Makes sense, doesn't it? So why am I getting a positive sign for some regions in the the south-west of England. Could be related to relatively high yields. Below is a map showing in the top panel our 715 parishes with the wheat yields. In the bottom panel is a map showing the magnitude of the coefficient of the variable 'market distance'. The areas I have circled in the top panel show high yields, in the bottom panel a positive sign. The two areas seem to correspond, don't they?
So it could be that the gains to the farmer of high yields more than make up for distance to market. I'll work on the math to get a function for this and then test it.

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