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

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Author Info

  • Ferguson, Shon

    ()
    (Research Institute of Industrial Economics (IFN))

  • Olfert, Rose

    (Johnson-Shoyama Graduate School of Public Policy)

Abstract

We measure the impact of the removal of a railway transportation subsidy on the adoption of technology for Western Canadian farms, using a unique combination of Census and freight rate data. We exploit the large regional variation in these one-time freight rate increases in order to identify causal effects of increased competitive pressure. Using a difference-in-differences methodology we find that higher freights 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 fertilizer usage and made significant land use changes.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 966.

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Length: 28 pages
Date of creation: 31 May 2013
Date of revision:
Handle: RePEc:hhs:iuiwop:0966

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Keywords: Agricultural Trade Liberalization; Export Subsidy; Technical Change;

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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.
  2. 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, 07.
  3. 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," Staff Report 286, Federal Reserve Bank of Minneapolis.
  4. Rahm, M. & Huffman, Wallace, 1984. "The Adoption of Reduced Tillage: The Role of Human Capital and Other Variables," Staff General Research Papers 10977, Iowa State University, Department of Economics.
  5. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-Level Productivity... for Some Plants," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1051-1099, August.
  6. 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, 03.
  7. Catherine J. Morrison Paul & Warren E. Johnston & Gerald A. G. Frengley, 2000. "Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 325-337, May.
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