IDEAS home Printed from https://ideas.repec.org/a/cup/jagaec/v35y2003i01p1-14_00.html
   My bibliography  Save this article

Economic Hysteresis in Variety Selection

Author

Listed:
  • Richards, Timothy J.
  • Green, Gareth P.

Abstract

Investing in a new perennial crop variety involves an irreversible commitment of capital and generates an uncertain return stream. As a result, the decision to adopt a new variety includes a significant real option value. Waiting for returns to rise above this real option causes a delay in adoption because of economic hysteresis. This study tests for hysteresis in the adoption of wine grape varieties using a sample of district-level data from the state of California. The empirical results show a significant hysteretic effect in wine grape investment, which might be reduced by activities that smooth earnings over time.

Suggested Citation

  • Richards, Timothy J. & Green, Gareth P., 2003. "Economic Hysteresis in Variety Selection," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 35(1), pages 1-14, April.
    • Handle: RePEc:cup:jagaec:v:35:y:2003:i:01:p:1-14_00
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S1074070800005897/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Giuliano Curatola & Michael Donadelli & Patrick Gruning & Christoph Meinerding, 2016. "Investment-Specific Shocks, Business Cycles, and Asset Prices," Bank of Lithuania Working Paper Series 36, Bank of Lithuania.
    2. Wesseler, Justus & Scatasta, Sara & Nillesen, Eleonora, 2007. "The maximum incremental social tolerable irreversible costs (MISTICs) and other benefits and costs of introducing transgenic maize in the EU-15," MPRA Paper 33229, University Library of Munich, Germany.
    3. Lima, Dmitry & Colson, Gregory & Karali, Berna & Guerrero, Bridget & Amosson, Stephen H. & Wetzstein, Michael, 2013. "A New Look at the Economic Evaluation of Wind Energy as an Alternative to Electric and Natural Gas-Powered Irrigation," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(4), pages 1-12, November.
    4. Ayenew, Habtamu Yesigat & Sauer, Johannes & Abate-Kassa, Getachew, 2016. "Cost of Risk Exposure, Farm Disinvestment and Adaptation to Climate Uncertainties: The Case of Arable Farms in the EU," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235595, Agricultural and Applied Economics Association.
    5. Ihli, Hanna Julia & Maart, Syster Christin & Musshoff, Oliver, 2012. "Investment and Disinvestment in Irrigation Technology – An Experimental Analysis of Farmers’ Decision Behavior –," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124532, Agricultural and Applied Economics Association.
    6. repec:ags:aaea13:150610 is not listed on IDEAS
    7. Delbridge, Timothy A., 2013. "Threshold Effects in Transition to Organic Dairy Production," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150554, Agricultural and Applied Economics Association.
    8. Timothy R. Davis & Fredoun Z. Ahmadi-Esfahani & Susana Iranzo, 2008. "Demand under product differentiation: an empirical analysis of the US wine market ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 52(4), pages 401-417, December.
    9. Davis, Timothy R. & Ahmadi-Esfahani, Fredoun Z. & Iranzo, Susana, 2008. "Demand under product differentiation: an empirical analysis of the US wine market," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(4), pages 1-17, December.
    10. Jonathon Siegle & Gregory Astill & Zoë Plakias & Daniel Tregeagle, 2024. "Estimating perennial crop supply response: A methodology literature review," Agricultural Economics, International Association of Agricultural Economists, vol. 55(2), pages 159-180, March.
    11. Ihli, Hanna Julia & Gassner, Anja & Musshoff, Oliver, 2018. "Experimental insights on the investment behavior of small-scale coffee farmers in central Uganda under risk and uncertainty," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 75(C), pages 31-44.
    12. Ihli, Hanna Julia & Musshoff, Oliver, 2013. "Understanding the Investment Behavior of Ugandan Smallholder Farmers: An Experimental Analysis," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150331, Agricultural and Applied Economics Association.
    13. Lauren Chenarides & Mark Manfredo & Timothy J. Richards, 2021. "COVID‐19 and Food Supply Chains," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 270-279, March.
    14. Tadesse, Dawit & Blank, Steven C., 2003. "Cultivar Diversity: A Neglected Risk Management Strategy," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(2), pages 1-16, August.
    15. Maart, Syster Christin & Mußhoff, Oliver & Odening, Martin & Sandri, Serena & Schade, Christian, 2011. "PR - Disinvestment Behaviour Of Agricultural Entrepreneurs: Experimental Results (p380-387)," 18th Congress, Methven, New Zealand, 2011 345580, International Farm Management Association.
    16. Ihli, Hanna Julia & Musshoff, Oliver, 2013. "Investment Behavior of Ugandan Smallholder Farmers: An Experimental Analysis," GlobalFood Discussion Papers 154775, Georg-August-Universitaet Goettingen, GlobalFood, Department of Agricultural Economics and Rural Development.
    17. Wilson, P. & Glithero, N.J. & Ramsden, S.J., 2014. "Prospects for dedicated energy crop production and attitudes towards agricultural straw use: The case of livestock farmers," Energy Policy, Elsevier, vol. 74(C), pages 101-110.
    18. Gesa Sophie Holst & Alexander März & Oliver Mußhoff, 2016. "Experimentelle Untersuchung der Optimalität von Investitionsentscheidungen [Do personal and experiment-specific characteristics influence the optimality of investment decisions?]," Schmalenbach Journal of Business Research, Springer, vol. 68(2), pages 167-192, July.
    19. Maart, Syster Christin & Musshoff, Oliver & Odening, Martin & Schade, Christian, 2011. "Closing down the Farm: An Experimental Analysis of Disinvestment Timing," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114375, European Association of Agricultural Economists.
    20. Sangcheol Song, 2014. "Entry mode irreversibility, host market uncertainty, and foreign subsidiary exits," Asia Pacific Journal of Management, Springer, vol. 31(2), pages 455-471, June.
    21. Maart, Syster Christin & Musshoff, Oliver & Odening, Martin & Schade, Christian, 2010. "Zum Desinvestitionsverhalten Landwirtschaftlicher Unternehmer: Ergebnisse Einer Experimentellen Untersuchung," 50th Annual Conference, Braunschweig, Germany, September 29-October 1, 2010 93943, German Association of Agricultural Economists (GEWISOLA).
    22. Maart, S.C. & Mußhoff, O. & Odening, M. & Schade, C., 2011. "Zum Desinvestitionsverhalten landwirtschaftlicher Unternehmer: Ergebnisse einer experimentellen Unternehmung," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 46, March.
    23. Ihli, Hanna J. & Maart-Noelck, Syster C. & Musshoff, Oliver, 2014. "Does timing matter? A real options experiment to farmers’ investment and disinvestment behaviours," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 58(3), July.
    24. Stephen F. Hamilton & Timothy J. Richards & Aric P. Shafran & Kathryn N. Vasilaky, 2022. "Farm labor productivity and the impact of mechanization," American Journal of Agricultural Economics, John Wiley & Sons, vol. 104(4), pages 1435-1459, August.

    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:cup:jagaec:v:35:y:2003:i:01:p:1-14_00. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/aae .

    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.