Modelling structural change and risk/uncertainty in decision making

Most models routinely used for modelling the impact of agricultural policies at the farm level are (implicitly or explicitly) based on a rather standard set of assumptions: perfectly competitive markets, both at the farm level and in the upstream and downstream industries (i.e. agricultural input industry and food processing industry), perfect information and rational behaviour by all agents, no uncertainty, stable factor endowment, stable structure of the farm sector. Since some of these assumptions are clearly rather restrictive and somehow unrealistic, the objective of this chapter is to analyse a set of models that try to relax some of these assumptions.