IDEAS home Printed from https://ideas.repec.org/a/ags/aergaa/253536.html
   My bibliography  Save this article

Innovation, Parallel Shifts of Supply, and Welfare

Author

Listed:
  • Karls, Michael A.
  • Horowitz, John B.
  • Sesmero, Juan
  • Van Cott, T. norman

Abstract

This article examines the impact of parallel supply shifts that cause supply to transition from elastic to inelastic on consumer, producer, and total surplus. We show that parallel rightward shifts of the supply curve cause consumer surplus and total surplus to increase unambiguously. On the other hand, producer surplus increases, reaches a maximum in the inelastic portion of both the demand and supply curves and then declines. This implies that innovations of this sort eventually result in consumers appropriating a higher share of total surplus. Finally, the maximum points for various producer surplus curves fall on a line which begins at the highest point of the total revenue curve and ends at the lower right corner of the total revenue curve.

Suggested Citation

  • Karls, Michael A. & Horowitz, John B. & Sesmero, Juan & Van Cott, T. norman, 2013. "Innovation, Parallel Shifts of Supply, and Welfare," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 14(1), pages 1-8.
    • Handle: RePEc:ags:aergaa:253536
    DOI: 10.22004/ag.econ.253536
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/253536/files/14_1_3.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.253536?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Xu, Pei & Wang, Zhigang, 2012. "Factors Affect Chinese Producers' Adoption of a New Production Technology: Survey Results from Chinese Fruits Producers," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 13(2), pages 1-16.
    2. Chryssochoidis, George M., 2003. "Factors affecting product innovations: A literature review," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 4(1), pages 1-16, January.
    3. Gay Y. Miller & Joseph M. Rosenblatt & Leroy J. Hushak, 1988. "The Effects of Supply Shifts on Producers' Surplus," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 70(4), pages 886-891.
    4. Karagiannis, Giannis & Furtan, William Hartley, 2002. "The Effects of Supply Shifts on Producers' Surplus: the Case of Inelastic Linear Supply Curves," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 3(1), pages 1-7, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. McVey, Marty Jay, 1996. "Valuing quality differentiated grains from a total logistics perspective," ISU General Staff Papers 1996010108000012326, Iowa State University, Department of Economics.
    2. Gardner, Bruce L., 2000. "International Trade And The Future Of American Agriculture," Journal of Agribusiness, Agricultural Economics Association of Georgia, vol. 18(1), pages 1-14, March.
    3. Anton Bondarev, 2012. "The long-run dynamics of product and process innovations for a multi-product monopolist," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 21(8), pages 775-799, November.
    4. John B. Horowitz & Michael A. Karls & Juan Sesmero & T. Norman Van Cott, 2023. "Beyond Simple Profit Maximization in Uncertain Markets: How Innovation and Entry Change Supply Curves and Producer Surplus," Journal of Private Enterprise, The Association of Private Enterprise Education, vol. 38(Summer 20), pages 55-77.
    5. Desquilbet, Marion & Dorin, Bruno & Couvet, Denis, 2013. "Land sharing vs. land sparing for biodiversity: How agricultural markets make the difference," TSE Working Papers 13-435, Toulouse School of Economics (TSE), revised Oct 2015.
    6. Huong Thu Pham, 2017. "Investigating the Impact of Lean Management on Innovation in Vietnamese SMEs," International Business Research, Canadian Center of Science and Education, vol. 10(11), pages 1-9, November.
    7. Khaliq Ur Rehman & Farhan Aslam & Mário Nuno Mata & José Moleiro Martins & António Abreu & António Morão Lourenço & Sabita Mariam, 2021. "Impact of Entrepreneurial Leadership on Product Innovation Performance: Intervening Effect of Absorptive Capacity, Intra-Firm Networks, and Design Thinking," Sustainability, MDPI, vol. 13(13), pages 1-16, June.
    8. David S Bullock & Marion Desquilbet & Klaus Salhofer & . American Agricultural Economics Association, 2000. "Economic effects of European GMO Labeling policy," Post-Print hal-02306126, HAL.
    9. Marion Desquilbet & Bruno Dorin & Denis Couvet, 2016. "Land Sharing vs Land Sparing to Conserve Biodiversity: How Agricultural Markets Make the Difference [land-sharing/land-sparing, comment les marchés font la différence]," Post-Print hal-03948463, HAL.
    10. Karagiannis, Giannis & Furtan, William Hartley, 2002. "The Effects of Supply Shifts on Producers' Surplus: the Case of Inelastic Linear Supply Curves," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 3(1), pages 1-7, January.
    11. Gardner, Bruce L., 1992. "Price Supports and Optimal Spending on Agricultural Research," Working Papers 197793, University of Maryland, Department of Agricultural and Resource Economics.
    12. Twine, Edgar & Katjiuongua, Hikuepi, 2015. "Farm-Level and Consumption Responses to Improved Efficiency of Tanzania’s Informal Dairy Value Chain," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 200329, Agricultural and Applied Economics Association.
    13. Foster, William & Rausser, Gordon, 1989. "A Political-Economic Rationale for Coupled Welfare Transfer Policies," CUDARE Working Papers 198488, University of California, Berkeley, Department of Agricultural and Resource Economics.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aergaa:253536. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/etagrea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.