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Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Policy Instruments

Author

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  • Jaeck Mélanie

    (Montpellier Business School – MRM, Montpellier, France)

  • Lifran Robert

    (Institut National de Recherche Agronomique (INRA) – LAMETA, Montpellier, France)

  • Stahn Hubert

    (Aix Marseille School of Economics, CNRS & EHESS, Aix-Marseille University, Marseille, France)

Abstract

This paper explores the economic conditions for the viability of organic farming in a context of imperfect competition. While most research dealing with this issue has adopted an empirical approach, we propose a theoretical approach. Farmers have a choice between two technologies, the conventional one using two complementary inputs, chemicals and seeds, and the organic one only requiring organic seeds. The upstream markets are oligopolistic and the firms adopt Cournot behavior. The game is solved backward. The equilibrium distribution of the farmers between both sectors is obtained by a free-entry condition. Since multiple equilibria could exist, including the non-emergence of organic farming, we spell out viability conditions for organic farming. Then, using an “infant industry” argument, we propose several public policy instruments able to support the development of organic farming and assess their relative efficiency. Results could be useful to assess the conditions of emergence and viability of agricultural innovations in analogous contexts.

Suggested Citation

  • Jaeck Mélanie & Lifran Robert & Stahn Hubert, 2014. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Policy Instruments," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 12(1), pages 95-108, January.
    • Handle: RePEc:bpj:bjafio:v:12:y:2014:i:1:p:14:n:8
    DOI: 10.1515/jafio-2013-0025
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