Spatial analysis of agricultural supply response in the Brazilian Center-West

This study investigates the importance of spatial dependence and inter-relations due to geographic localization over the supply response to agricultural prices, in the Brazilian Center-West. Specifically, we evaluated: the spatial error dependence in the input demand and output supply; and, the importance of input and output prices in farmers response. The contribution to the literature is to combine a translog profit share system of equations with spatial error dependence, cross-sectional and four agricultural censuses. There are econometric evidences of spatial dependencies in the residuals. There were high positive spatial autocorrelation in products. This demonstrates an influence of other factors not included in the model, modifying the residuals only due to localization. There are substitution relations mainly to rice price changes and some omplementarities among others. Among factors, they were complements. The spatial effects in this study were very important, changing decisively the calculated elasticities, and showing that all analyzed products suffer from these effects