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An analysis of risk aversion in biotechnology adoption: the case of US genetically modified corn

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  • Do-il Yoo

    (Seoul National University)

  • Jean-Paul Chavas

    (University of Wisconsin-Madison)

Abstract

This paper analyzes the role of risk aversion in biotechnology adoption with the application on the US genetically modified corn. A dynamic programming analysis of technology adoption is conducted using the Kalman filter as a representation of the associated learning process. The relevant Bellman equation is jointly solved within model estimation using a minimum-distance estimator. Results show that the more the risk-averse farmers are, the later they adopt GM technology, such effects being statistically significant. Sensitivity analysis results examine the factors affecting farmers’ behavior. They document the role of risk aversion in technology adoption. They also uncover the presence of farm heterogeneity in the process of adopting a new technology.

Suggested Citation

  • Do-il Yoo & Jean-Paul Chavas, 2021. "An analysis of risk aversion in biotechnology adoption: the case of US genetically modified corn," Empirical Economics, Springer, vol. 60(5), pages 2613-2635, May.
    • Handle: RePEc:spr:empeco:v:60:y:2021:i:5:d:10.1007_s00181-020-01842-2
    DOI: 10.1007/s00181-020-01842-2
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    References listed on IDEAS

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    1. Maolong Chen & Chaoran Hu & Robert J. Myers, 2022. "Understanding transient technology use among smallholder farmers in Africa: A dynamic programming approach," Agricultural Economics, International Association of Agricultural Economists, vol. 53(S1), pages 91-107, November.

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    More about this item

    Keywords

    Biotechnology adoption; Kalman filter algorithm; Minimum-distance estimator (MDE); Risk aversion;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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