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Who bears the burden and who receives the gain?-The case of GWRDC R&D investments in the Australian grape and wine industry

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  • Xueyan Zhao

    (Department of Econometrics & Business Statistics, Monash University, Clayton, VIC 3800, Australia. E-mail: xueyan.zhao@buseco.monash.edu.au)

Abstract

It is only when R&D levies are invested in the sectors in which they are raised that the distribution of the benefits among industry sectors is exactly the same as the incidence of the levies. This article examines the distributions of both costs and returns from the Australian grape and wine R&D investments and the divergence between the two distributions. The real shares of R&D costs are estimated through the incidence of the levies and compared with the nominal shares. Grape-growers, winemakers and overseas consumers are shown to receive bigger proportions of gains than their proportions of costs, while the Australian government and other domestic parties as a group bear a much higher proportion of costs than returns. This article discusses implications of results for the equity issue between premium and nonpremium producers, the free-rider issue for overseas consumers, and the justification of government funding of grape and wine R&D. [EconLit citations: Q16, Q18, and H43]. © 2003 Wiley Periodicals, Inc. Agribusiness 19: 355-366, 2003.

Suggested Citation

  • Xueyan Zhao, 2003. "Who bears the burden and who receives the gain?-The case of GWRDC R&D investments in the Australian grape and wine industry," Agribusiness, John Wiley & Sons, Ltd., vol. 19(3), pages 355-366.
    • Handle: RePEc:wly:agribz:v:19:y:2003:i:3:p:355-366
    DOI: 10.1002/agr.10065
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    References listed on IDEAS

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    1. Zhao, Xueyan & Mullen, John D. & Griffith, Garry R. & Griffiths, William E. & Piggott, Roley R., 2000. "An Equilibrium Displacement Model of the Australian Beef Industry," Research Reports 28007, New South Wales Department of Primary Industries Research Economists.
    2. Xueyan Zhao & Kym Anderson & Glyn Wittwer, 2019. "Who Gains from Australian Generic Wine Promotion and R&D?," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 9, pages 189-223, World Scientific Publishing Co. Pte. Ltd..
    3. Xueyan Zhao & Kym Anderson & Glyn Wittwer, 2002. "Who Gains from Australian Generic Wine R&D and Promotion?," Centre for International Economic Studies Working Papers 2002-04, University of Adelaide, Centre for International Economic Studies.
    4. repec:bla:ecorec:v:58:y:1982:i:162:p:253-62 is not listed on IDEAS
    5. Christopher C. Findlay & Robert L. Jones, 1982. "The Marginal Cost of Australian Income Taxation," The Economic Record, The Economic Society of Australia, vol. 58(3), pages 253-262, September.
    6. Glyn Wittwer & Nick Berger & Kym Anderson, 2019. "A Model of the World’s Wine Markets," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 1, pages 3-26, World Scientific Publishing Co. Pte. Ltd..
    7. J. M. Alston & J. D. Mullen, 1992. "Economic Effects Of Research Into Traded Goods: The Case Of Australian Wool," Journal of Agricultural Economics, Wiley Blackwell, vol. 43(2), pages 268-278, May.
    8. Zhao, Xueyan & Mullen, John D. & Griffith, Garry R., 2005. "Economic Surplus Measurement in Multi-Market Models," Working Papers 12910, University of New England, School of Economics.
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    Cited by:

    1. 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.
    2. Horridge, Mark & Madden, John & Wittwer, Glyn, 2005. "The impact of the 2002-2003 drought on Australia," Journal of Policy Modeling, Elsevier, vol. 27(3), pages 285-308, April.
    3. Xueyan Zhao & Kym Anderson & Glyn Wittwer, 2019. "Who Gains from Australian Generic Wine Promotion and R&D?," World Scientific Book Chapters, in: Kym Anderson (ed.), The International Economics of Wine, chapter 9, pages 189-223, World Scientific Publishing Co. Pte. Ltd..
    4. Xayavong, Vilaphonh & Radhakrishnan, Manju & Kingwell, Ross S., 2013. "Development Strategies for a Premium Wine Region of Australia: an application of value chain modelling," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152186, Australian Agricultural and Resource Economics Society.

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    More about this item

    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy; Animal Welfare Policy
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • D60 - Microeconomics - - Welfare Economics - - - General
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
    • C69 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Other

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