IDEAS home Printed from https://ideas.repec.org/a/bla/ecorec/v73y1997i221p146-158.html
   My bibliography  Save this article

Producer Surplus without Apology? Evaluating Investments in RD

Author

Listed:
  • WILL MARTIN
  • JULIAN M. ALSTON

Abstract

Comparison of producer surplus with definitive measures based on the profit function reveals potential problems with using changes in producer surplus to measure the benefits of some common types of technical change. Some illustrative applications indicate that the conventional producer surplus measures may seriously underestimate the change in profit induced by new technology, depending on the characteristics of the underlying technology which define the nature of the supply function, and the nature of the technical change. We provide guidelines for identifying cases where producer surplus will under‐estimate producer research benefits, and suggest alternative measures.

Suggested Citation

  • Will Martin & Julian M. Alston, 1997. "Producer Surplus without Apology? Evaluating Investments in RD," The Economic Record, The Economic Society of Australia, vol. 73(221), pages 146-158, June.
    • Handle: RePEc:bla:ecorec:v:73:y:1997:i:221:p:146-158
    DOI: 10.1111/j.1475-4932.1997.tb00988.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1475-4932.1997.tb00988.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1475-4932.1997.tb00988.x?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. Fulginiti, Lilyan E & Perrin, Richard K, 1993. "Prices and Productivity in Agriculture," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 471-482, August.
    2. Duncan, R & Tisdell, Clem, 1971. "Research and Technical Progress: The Returns to Producers," The Economic Record, The Economic Society of Australia, vol. 47(117), pages 124-129, March.
    3. Shumway, C. Richard & Jegasothy, Kandiah & Alexander, William P., 1988. "Production Interrelationships In Sri Lankan Peasant Agriculture," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 31(1), pages 1-13, April.
    4. Chambers, Robert G. & Lopez, Ramon, 1993. "Public investment and real-price supports," Journal of Public Economics, Elsevier, vol. 52(1), pages 73-82, August.
    5. Anderson, James E & Neary, J Peter, 1992. "Trade Reform with Quotas, Partial Rent Retention, and Tariffs," Econometrica, Econometric Society, vol. 60(1), pages 57-76, January.
    6. Davis, Jeffrey S. & Oram, Peter A. & Ryan, James G., 1987. "Assessment of Agricultural Research Priorities: An International Perspective," Monographs, Australian Centre for International Agricultural Research, number 118048.
    7. Will J. Martin & Julian M. Alston, 1994. "A Dual Approach to Evaluating Research Benefits in the Presence of Trade Distortions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(1), pages 26-35.
    8. Diewert, Walter E & Wales, Terence J, 1987. "Flexible Functional Forms and Global Curvature Conditions," Econometrica, Econometric Society, vol. 55(1), pages 43-68, January.
    9. R. K. Lindner & F. G. Jarrett, 1980. "Supply Shifts and the Size of Research Benefits: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 62(4), pages 841-844.
    10. Harry de Gorter & David J. Nielson & Gordon C. Rausser, 1992. "Productive and Predatory Public Policies: Research Expenditures and Producer Subsidies in Agriculture," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(1), pages 27-37.
    11. Scobie, Grant M., 1976. "Who Benefits From Agricultural Research?," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 44(04), pages 1-6, December.
    12. Gorter, H. de & Nielson, D. & Rausser, Gordon C., 1992. "Productive and Predatory Public Policies," Staff General Research Papers Archive 732, Iowa State University, Department of Economics.
    13. Lloyd, P. J. & Schweinberger, A. G., 1988. "Trade expenditure functions and the gains from trade," Journal of International Economics, Elsevier, vol. 24(3-4), pages 275-297, May.
    14. Sarhangi, R.F. & Logan, J. & Duncan, Ronald C. & Hagan, Philip, 1977. "Who Benefits From Agricultural Research: Comment," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 45(04), pages 1-7, December.
    15. R. Duncan & C. Tisdell, 1971. "Research and Technical Progress: The Returns to Producers," The Economic Record, The Economic Society of Australia, vol. 47(1), pages 124-129, March.
    16. Thomas J. Voon & Geoff W. Edwards, 1992. "Research Payoff from Quality Improvement: The Case of Protein in Australian Wheat," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 74(3), pages 564-572.
    17. Geoff W. Edwards & John W. Freebairn, 1984. "The Gains from Research into Tradable Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(1), pages 41-49.
    18. Zvi Griliches, 1958. "Research Costs and Social Returns: Hybrid Corn and Related Innovations," Journal of Political Economy, University of Chicago Press, vol. 66, pages 419-419.
    19. Hans P. Binswanger, 1974. "A Cost Function Approach to the Measurement of Elasticities of Factor Demand and Elasticities of Substitution," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 56(2), pages 377-386.
    20. Murphy, John A. & Furtan, W. Hartley & Schmitz, Andrew, 1993. "The gains from agricultural research under distorted trade," Journal of Public Economics, Elsevier, vol. 51(2), pages 161-172, June.
    21. R. K. Lindner & F. G. Jarrett, 1978. "Supply Shifts and the Size of Research Benefits," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 60(1), pages 48-58.
    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. Alston, Julian M. & Chalfant, James A. & Pardey, Philip G., 1993. "Structural Adjustment In Oecd Agriculture: Government Policies And Technical Change," Working Papers 14473, University of Minnesota, Center for International Food and Agricultural Policy.
    2. Michael Harris & Alan Lloyd, 1991. "The Returns to Agricultural Research and the Underinvestment Hypothesis ‐ A Survey," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 24(3), pages 16-27, July.
    3. Alston, Julian M. & Freebairn, John W. & James, Jennifer S., 2004. "Levy-funded research choices by producers and society," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 48(1), pages 1-32.
    4. Vere, David T. & Sinden, Jack A. & Campbell, M.H., 1980. "Social Benefits of Serrated Tussock Control in New South Wales," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 56(03), pages 1-16, December.
    5. Edwards, Geoff W. & Freebairn, John W., 1982. "The Social Benefits from an Increase in Productivity in a Part of an Industry," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 50(02), pages 1-18, August.
    6. Salayo, Nerissa D., 2000. "Investment Opportunities for the Shrimp Processing Industry in the Philippines: Results from a Hedonic Analysis," Discussion Papers DP 2000-12, Philippine Institute for Development Studies.
    7. Norton, George W. & Davis, Jeffrey S., 1979. "Review Of Methods Used To Evaluate Returns To Agricultural Research," Staff Papers 13520, University of Minnesota, Department of Applied Economics.
    8. Pedro Andres Garzon Delvaux & Heinrich Hockmann & Peter Voigt & Pavel Ciaian & Sergio Gomez y Paloma, 2018. "The impact of private R&D on the performance of food-processing firms: Evidence from Europe, Japan and North America," JRC Research Reports JRC104144, Joint Research Centre.
    9. Martin, Will & Alston, Julian M., 1992. "An exact approach for evaluating the benefits from technological change," Policy Research Working Paper Series 1024, The World Bank.
    10. Pannell, D. J., 1999. "On the estimation of on-farm benefits of agricultural research," Agricultural Systems, Elsevier, vol. 61(2), pages 123-134, August.
    11. Miller, Gay & Rosenblatt, Joseph & Hushak, Leroy, 1987. "The Effects Of Supply Shifts On Producers Surplus," 1987 Annual Meeting, August 2-5, East Lansing, Michigan 270116, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Smith, Anna Rickett & Dorfman, Jeffrey H., 2002. "An Economic Evaluation Of Cotton And Peanut Research In Southeastern United States," 2002 Annual meeting, July 28-31, Long Beach, CA 19900, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Bullock, David S. & Salhofer, Klaus, 2003. "Judging agricultural policies: a survey," Agricultural Economics, Blackwell, vol. 28(3), pages 225-243, May.
    14. Cooke, Stephen C. & Sundquist, W. Burt, 1987. "Cost Structures, Productivities and the Distribution of Technology Benefits Among Producers for Major U.S. Field Crops," Evaluating Agricultural Research and Productivity, Proceedings of a Workshop, Atlanta, Georgia, January 29-30, 1987, Miscellaneous Publication 52 50020, University of Minnesota, Agricultural Experiment Station.
    15. Jarrett, Frank G. & Lindner, Robert K., 1977. "Research Benefits Revisited," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 45(04), pages 1-12, December.
    16. Borrell, Brent & Jiang, Tingsong & Pearce, David & Gould, Ian, 2014. "Payoffs from research and development along the Australian food value chain: a general equilibrium analysis," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    17. Vernon Ruttan, 1982. "Bureaucratic productivity: The case of agricultural research revisited — A rejoinder," Public Choice, Springer, vol. 39(2), pages 319-329, January.
    18. Swinnen, Johan F. M. & Gorter, Harry de & Rausser, Gordon C. & Banerjee, Anurag N., 2000. "The political economy of public research investment and commodity policies in agriculture: an empirical study," Agricultural Economics, Blackwell, vol. 22(2), pages 111-122, March.
    19. Pannell, David J. & Morrison, David A., 1994. "Towards a Decision Support System for Economic Evaluation of Agricultural Research," 1994 Conference (38th), February 8-10, 1994, Wellington, New Zealand 148530, Australian Agricultural and Resource Economics Society.
    20. de Gorter, Harry & Swinnen, Johan F.M., 1996. "The Impact Of Economic Development On Redistributive And Public Research Policies In Agriculture," Working Papers 127931, Cornell University, Department of Applied Economics and Management.

    More about this item

    Statistics

    Access and download statistics

    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:bla:ecorec:v:73:y:1997:i:221:p:146-158. 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: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/esausea.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.