Asset fixity and investment asymmetry in agriculture

Carl H. Nelson, John B. Braden, Jae Sun Roh

Research output: Contribution to journalArticlepeer-review


Fixed asset theory implies that it is more difficult to dispose of capital specific to agricultural production than to add to the stock of specialized capital. This theory is tested by determining whether transitions between states of disinvestment are as likely as transitions between states of investment. Of the twenty-four annual capital stock series analyzed, evidence of asymmetry between investment and disinvestment is strong in eight cases, weak in four, and insignificant in twelve. There is considerable, although mixed, evidence of asymmetry for tractors (farm and nonfarm) and other specialized vehicles since World War II and for agricultural machinery.

Original languageEnglish (US)
Pages (from-to)970-979
Number of pages10
JournalAmerican Journal of Agricultural Economics
Issue number4
StatePublished - Nov 1989


  • Fixed asset theory
  • Irreversible investment
  • Markov chain

ASJC Scopus subject areas

  • Agricultural and Biological Sciences (miscellaneous)
  • Economics and Econometrics


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