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Returns to Public Investments in Agriculture with Imperfect Downstream Competition

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  • Stephen F. Hamilton
  • David Sunding

Abstract

A multiple-market framework is developed to measure the size and distribution of research benefits. The model considers an upstream raw product market and a downstream finished productmarket and allows for imperfect competition in the intermediary food-processing sector. A central conceptual result is derived: an increase in raw product output is a sufficient condition for cost-reducing innovations in the farm sector to increase social welfare. A special case of linear farm supply and isoelastic processing production functions reveals that necessary conditions for welfare to decrease are a convergent farm supply shift, an oligopsonistic upstream market configuration, and increasing returns-to-scale processing technology. Copyright 1998, Oxford University Press.

Suggested Citation

  • Stephen F. Hamilton & David Sunding, 1998. "Returns to Public Investments in Agriculture with Imperfect Downstream Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 830-838.
  • Handle: RePEc:oup:ajagec:v:80:y:1998:i:4:p:830-838
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    File URL: http://hdl.handle.net/10.2307/1244067
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    Citations

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    Cited by:

    1. Philippe Bontems & Nicolas Gruyer, 2007. "When cost improvements harm consumers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(1), pages 63-79, February.
    2. Richards, Timothy J. & Padilla, Luis, 2001. "Commodity R&D, Patenting, And Promotion," 2001 Annual meeting, August 5-8, Chicago, IL 20497, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Richards, Timothy J. & Padilla, Luis, 2002. "Commodity R&D And Promotion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(03), December.
    4. Bontems, Philippe & Bouamra-Mechemache, Zohra, 2003. "Predatory Accommodation In Vertical Contracting With Externalities," 2003 Annual meeting, July 27-30, Montreal, Canada 22044, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. J. A. L. Cranfield, 2003. "Optimal Collective Investment in Generic Advertising, Export Market Promotion and Cost-of-Production-Reducing Research," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 299-321, November.
    6. Peretz, Jean H. & Das, Sujit & Tonn, Bruce E., 2009. "Evaluating knowledge benefits of automotive lightweighting materials R&D projects," Evaluation and Program Planning, Elsevier, vol. 32(3), pages 300-309, August.
    7. Frisvold, George B. & Sullivan, John & Raneses, Anton, 2003. "Genetic improvements in major US crops: the size and distribution of benefits," Agricultural Economics, Blackwell, vol. 28(2), pages 109-119, March.
    8. Sexton, Richard J. & Sexton, Terri A., 2000. "Measuring research benefits in an imperfect market: reply to Holloway," Agricultural Economics, Blackwell, vol. 22(2), pages 129-131, March.
    9. Alston, Julian M. & Sexton, Richard J. & Zhang, Mingxia, 1999. "Imperfect competition, functional forms, and the size and distribution of research benefits," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 21(2), October.
    10. João Ricardo Faria & Franklin G. Mixon, 2016. "Farmer-Entrepreneurs, Agricultural Innovation, and Explosive Research and Development Cycles," Administrative Sciences, MDPI, Open Access Journal, vol. 6(4), pages 1-11, September.
    11. Sexton, Richard J. & Sexton, Terri A., 2000. "Measuring research benefits in an imperfect market: reply to Holloway," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.
    12. Zhang, Mingxia & Sexton, Richard J., 2000. "Optimal Commodity Promotion In Imperfectly Competitive Markets," 2000 Annual meeting, July 30-August 2, Tampa, FL 21823, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    13. Lei, Lei, 2018. "Effects of trade policy on technological innovation in agricultural markets - implications for the developing economies," IDE Discussion Papers 687, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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