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Informational Cascades and Technology Adoption: Evidence from Greek and German Organic Growers

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Author Info

  • Konstantinos Chatzimichael

    ()
    (Dept of Economics, University of Crete, Greece)

  • Margarita Genius

    ()
    (Department of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    ()
    (Department of Economics, University of Crete, Greece)

Abstract

The present study aims to empirically analyze the competing effects of social interactions and conversion subsidies on the adoption of organic farming practices for two samples of olive and cereal growers in Greece and Germany, respectively. To this end we construct two alternative indicators to capture informational cascades created in rural areas, one based on demographic characteristics and one on profitability considerations. Building upon the theoretical findings of Foster and Rosenweig (1995), Munshi (2004), Bandiera and Rasul (2006) and Weber (2012), we find that informational cascades are indeed important in revising farmers' perceptions and adoption behavior in both rural areas of Europe. Our results show that conversion subsidies can enhance social network effects internalizing informational externalities even in areas where there is already a critical mass of adopters.

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File URL: http://economics.soc.uoc.gr/wpa/docs/EAREadoption_resubmited_version.pdf
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Bibliographic Info

Paper provided by University of Crete, Department of Economics in its series Working Papers with number 1102.

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Date of creation: 20 Mar 2011
Date of revision: 12 Mar 2013
Handle: RePEc:crt:wpaper:1102

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Keywords: informational externalities; organic farming adoption; conversion subsidies; Germany; Greece;

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Cited by:
  1. Unay Gailhard, Ilkay & Bavorova, Miroslava & Pirscher, Frauke, 2012. "The Influence of Communication Frequency with Social Network Actors on the Continuous Innovation Adoption: Organic Farmers in Germany," 131st Seminar, September 18-19, 2012, Prague, Czech Republic 135786, European Association of Agricultural Economists.

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