Asset fixity and investment asymmetry in agriculture

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.