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Analysis Of Projects With Price Effects, And Application To Innovation And Technical Change

Author

Listed:
  • Oehmke, James F.
  • Crawford, Eric W.

Abstract

This paper provides an introduction to benefit-cost analysis of projects with price effects, intended for use in teaching. The impact of price changes on consumers' and producers' surplus under competitive market assumptions is presented graphically with linked numerical examples. The effect of demand and supply shifts on social surplus is then discussed, distinguishing the shift effect holding price constant from the price effects themselves. The distribution of gains and losses to consumers and producers is also evaluated. The analysis is then extended to include distortions such as price supports and ceiling prices. Applications to the evaluation of agricultural research impacts are then introduced, drawing on recent literature. An illustrative exercise based on maize research in Zambia is included.

Suggested Citation

  • Oehmke, James F. & Crawford, Eric W., 2004. "Analysis Of Projects With Price Effects, And Application To Innovation And Technical Change," Staff Paper Series 11766, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  • Handle: RePEc:ags:midasp:11766
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    File URL: http://ageconsearch.umn.edu/record/11766/files/sp04-02.pdf
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    References listed on IDEAS

    as
    1. Oehmke, James F., 1988. "The Calculation of Returns to Research in Distorted Markets," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 2(4), December.
    2. Oehmke, James F., 1988. "The calculation of returns to research in distorted markets," Agricultural Economics, Blackwell, vol. 2(4), pages 291-302, December.
    3. James F. Oehmke & Eric W. Crawford, 2002. "The Sensitivity of Returns to Research Calculations to Supply Elasticity," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 366-369.
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