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Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

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  • Ferguson, Shon
  • Olfert, Rose

Abstract

We estimate the impact that removing a railway transportation subsidy has on the adoption of production technology for Western Canadian farms by using a unique combination of census and freight rate data. We exploit the large regional variation in these one-time freight rate increases to identify causal effects of increased competitive pressure. Using a difference-in-differences methodology, we find that higher freight rates—and hence lower farm gate prices—induced farmers to adopt new, more efficient production technology. We also find that farmers experiencing the greatest transportation cost increases also increased their fertilizer usage and made significant land use changes.
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  • Ferguson, Shon & Olfert, Rose, 2013. "Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada," CAIRN Policy Briefs 272856, Canadian Agricultural Innovation and Regulation Network (CAIRN).
    • Handle: RePEc:ags:catirn:272856
    DOI: 10.22004/ag.econ.272856
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    1. James Vercammen, 1996. "An Overview of Changes in Western Grain Transportation Policy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(4), pages 397-402, December.
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    6. Doan, Darcie & Paddock, Brian & Dyer, Jan, 2003. "Grain Transportation Policy and Transformation in Western Canadian Agriculture," Policy Reform and Adjustment Workshop, October 23-25, 2003, Imperial College London, Wye Campus 15748, International Agricultural Policy Reform and Adjustment Project (IAPRAP).
    7. Troy G. Schmitz & Tim Highmoor & Andrew Schmitz, 2002. "Termination of the WGTA: An Examination of Factor Market Distortions, Input Subsidies anc Compensation," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(3), pages 333-347, November.
    8. James A. Schmitz Jr., 2005. "What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 582-625, June.
    9. K. K. Klein & W. A. Kerr, 1996. "The Crow Rate Issue: A Retrospective on the Contributions of the Agricultural Economics Profession in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(1), pages 1-18, March.
    10. S.N. Kulshreshtha & D.G. Devine, 1978. "Historical Perspective And Propositions On The Crowsnest Pass Freight Rate Agreement," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 26(2), pages 72-83, July.
    11. Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-335, May.
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    Cited by:

    1. Brown, Mark & Ferguson, Shon M. & Viju, Crina, 2017. "Agricultural Trade Reform, Reallocation and Technical Change: Evidence from the Canadian Prairies," 2017 International Congress, August 28-September 1, 2017, Parma, Italy 263492, European Association of Agricultural Economists.
    2. Mao, Hui & Zhou, Li & Ifft, Jennifer & Ying, RuiYao, 2019. "Risk preferences, production contracts and technology adoption by broiler farmers in China," China Economic Review, Elsevier, vol. 54(C), pages 147-159.
    3. Colin A. Carter & Shon M. Ferguson, 2020. "State trading deregulation and prairie durum wheat production," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 68(1), pages 107-116, March.
    4. Mao, Hui & Zhou, Li & Ifft, Jennifer, 2017. "Risk Preferences, Contracts and Technology Adoption by Broiler Farmers in China," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 257248, Agricultural and Applied Economics Association.
    5. W. Mark Brown & Shon M. Ferguson & Crina Viju‐Miljusevic, 2020. "Farm Size, Technology Adoption and Agricultural Trade Reform: Evidence from Canada," Journal of Agricultural Economics, Wiley Blackwell, vol. 71(3), pages 676-697, September.
    6. Ray D. Bollman & Shon M. Ferguson, 2019. "The Local Impacts of Agricultural Subsidies: Evidence from the Canadian Prairies," Journal of Agricultural Economics, Wiley Blackwell, vol. 70(2), pages 507-528, June.
    7. Mark Brown & Shon M. Ferguson & Crina Viju-Miljusevic, 2018. "Intranational Trade Costs, Reallocation, and Technical Change: Evidence from a Canadian Agricultural Trade Policy Reform," NBER Chapters, in: Agricultural Productivity and Producer Behavior, pages 125-155, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Agricultural and Food Policy; Teaching/Communication/Extension/Profession;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q17 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agriculture in International Trade
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy

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