Technology adoption, comparative advantage, and suboptimal choices: Evidence from Bangladesh

Despite the potential for hybrid rice varieties to increase yields, their adoption rates among Bangladeshi smallholders remain low. Most farmers prefer suboptimal inbred high‐yielding or local rice varieties. Using a rich panel dataset from Bangladesh, this study tests the comparative advantage hypothesis—whether heterogeneous returns from adopting hybrid rice varieties explain slower diffusion among rice farmers. The findings reveal that hybrid rice varieties exhibit about 30% higher average returns than non‐hybrids, and returns exceeding 70% accrue to only a small subset of farmers based on their comparative advantage. In contrast, many other farmers experience minimal or negative returns from adopting hybrid rice varieties. The findings show no comparative advantage in transitioning from local to high‐yielding varieties (HYV), suggesting returns to HYV adoption are more uniform across farmers. Findings from this study confirm that adoption decisions are well‐explained based on individual returns to available technology.