The Effect Of Market Structure On Adaptation To Climate Change In Agriculture
AbstractWhen assessing climate change impact, adaptation is an important behavioral response to reduce potential risk. But it has been widely recognized that there are barriers to adaptation. And attempts to estimate impacts may be biased when these barriers neglected. Potential barrier on adaptation decision from market structure have not been identified. We develop a theoretical model to evaluate adaptation incentives of farmers under climate change across various market structures. In agricultural production where acreage adjustment is costly, our theoretical model suggests that the “competition effect” plays an important role in determining incentives to adapt. The competition effect in the market may outweigh the production effect and reduce producer incentives to change production practices. Results also suggest that monopolists may have a higher incentive to adapt since the market is under their direct control with less competition even though these incentives are still much smaller than socially optimal levels. In contrast, there can be strategic interactions among players which can lead to inaction (not investing in adaptations) due to the threat of potentially higher competition in other market structures.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by International Agricultural Trade Research Consortium in its series Proceedings Issues, 2010: Climate Change in World Agriculture: Mitigation, Adaptation, Trade and Food Security, June 2010, Stuttgart- Hohenheim, Germany with number 91258.
Date of creation: 2010
Date of revision:
Environmental Economics and Policy; Industrial Organization; Resource /Energy Economics and Policy;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-08-06 (Agricultural Economics)
- NEP-ALL-2010-08-06 (All new papers)
- NEP-ENE-2010-08-06 (Energy Economics)
- NEP-ENV-2010-08-06 (Environmental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Deschenes, Olivier & Greenstone, Michael, 2006.
"The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather,"
- Olivier Desch�nes & Michael Greenstone, 2007. "The Economic Impacts of Climate Change: Evidence from Agricultural Output and Random Fluctuations in Weather," American Economic Review, American Economic Association, vol. 97(1), pages 354-385, March.
- Chambers,Robert G. & Quiggin,John, 2000.
"Uncertainty, Production, Choice, and Agency,"
Cambridge University Press, number 9780521785235, December.
- Sandmo, Agnar, 1971. "On the Theory of the Competitive Firm under Price Uncertainty," American Economic Review, American Economic Association, vol. 61(1), pages 65-73, March.
- Svetlana Mizina & Joel Smith & Erwin Gossen & Karl Spiecker & Stephen Witkowski, 1999. "An evaluation of adaptation options for climate change impacts on agriculture in Kazakhstan," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 4(1), pages 25-41, March.
- Heuson, Clemens & Gawel, Erik & Gebhardt, Oliver & Hansjürgens, Bernd & Lehmann, Paul & Meyer, Volker & Schwarze, Reimund, 2012. "Ökonomische Grundfragen der Klimaanpassung: Umrisse eines neuen Forschungsprogramms," UFZ Reports 02/2012, Helmholtz Centre for Environmental Research (UFZ).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search).
If references are entirely missing, you can add them using this form.