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Supply Chain Design and Adoption of Indivisible Technology

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  • Lu, Liang
  • Reardon, Thomas
  • Zilberman, David

Abstract

In this paper, we develop a framework to analyze adoption of indivisible technologies by relatively small farms using a threshold diffusion model. It shows that different supply chains may emerge to enable the adoption of indivisible technologies. Independent technology dealers may buy the indivisible equipment and rent it to farmers, when the gain from adoption is not affected by scale or ownership of the technology. Also, larger farmers may buy the technology equipment and rent it (renting the machine per se or providing a set of services that includes use of the machinery for the farmer buying the service) to smaller farmers, especially when there are gains from scale or ownership. The paper derives equilibrium prices and quantities in the output, equipment, and technology rental market. These equilibrium prices and quantities depend on the heterogeneity of farmers and the features of the technology. Introduction of the new indivisible technology will benefit larger adopting farmers and consumers but may hurt non-adopters. We illustrate our conceptual findings with empirical examples.
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Suggested Citation

  • Lu, Liang & Reardon, Thomas & Zilberman, David, 2016. "Supply Chain Design and Adoption of Indivisible Technology," SCC-76 Meeting, 2016, March 17-19, Pensacola, Florida 233763, SCC-76: Economics and Management of Risk in Agriculture and Natural Resources.
    • Handle: RePEc:ags:scc016:233763
    DOI: 10.22004/ag.econ.233763
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    Cited by:

    1. Maas, Alexander S. & Lu, Liang, 2020. "“Elections have Consequences”: Partisan Politics are Literally Killing Us," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304457, Agricultural and Applied Economics Association.
    2. Surendran-Padmaja, Subash & Parlasca, Martin C. & Qaim, Matin & Krishna, Vijesh V., 2025. "Private service provision contributes to widespread innovation adoption among smallholder farmers: Laser land levelling technology in northwestern India," Agricultural Water Management, Elsevier, vol. 312(C).
    3. A. Ford Ramsey & Barry Goodwin & Mildred Haley, 2021. "Labor Dynamics and Supply Chain Disruption in Food Manufacturing," NBER Chapters, in: Risks in Agricultural Supply Chains, National Bureau of Economic Research, Inc.
    4. Charlton, Diane & Hill, Alexandra E. & Taylor, J. Edward, "undated". "Automation and social impacts: winners and losers," ESA Working Papers 330793, Food and Agriculture Organization of the United Nations, Agricultural Development Economics Division (ESA).
    5. Gulati, Kajal & Lybbert, Travis J. & Spielman, David J., "undated". "Diffusing to level fields: Evolution of laser land leveling technology markets in India," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258387, Agricultural and Applied Economics Association.
    6. Amir Heiman & Joel Ferguson & David Zilberman, 2020. "Marketing and Technology Adoption and Diffusion," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 42(1), pages 21-30, March.
    7. Umakanta Mishra & Abu Hashan Md Mashud & Ming-Lang Tseng & Jei-Zheng Wu, 2021. "Optimizing a Sustainable Supply Chain Inventory Model for Controllable Deterioration and Emission Rates in a Greenhouse Farm," Mathematics, MDPI, vol. 9(5), pages 1-23, February.
    8. Diane Charlton & Marcelo Castillo, 2021. "Potential Impacts of a Pandemic on the US Farm Labor Market," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(1), pages 39-57, March.
    9. Guang Tian & Xiaoxue Du & Fangbin Qiao & Andres Trujillo-Barrera, 2021. "Technology Adoption and Learning-by-Doing: The Case of Bt Cotton Adoption in China," JRFM, MDPI, vol. 14(11), pages 1-13, November.
    10. Hennessy, David A. & Zhang, Jing & Bai, Na, 2019. "Animal health inputs, endogenous risk, general infrastructure, technology adoption and industrialized animal agriculture," Food Policy, Elsevier, vol. 83(C), pages 355-362.
    11. Reardon, Thomas & Awokuse, Titus & Belton, Ben & Liverpool-Tasie, Lenis Saweda O. & Minten, Bart & Nguyen, Genevieve & Qanti, Sara & Swinnen, Johan & Vos, Rob & Zilberman, David, 2024. "Emerging outsource agricultural services enable farmer adaptation in agrifood value chains: A product cycle perspective," Food Policy, Elsevier, vol. 127(C).
    12. Sara Ratna Qanti & Thomas Reardon & Arief Iswariyadi, 2017. "Triangle of Linkages among Modernising Markets, Sprayer–traders, and Mango-farming Intensification in Indonesia," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 53(2), pages 187-208, May.
    13. Palatnik, Ruslana Rachel & Freer, Mikhail & Levin, Mark & Golberg, Alexander & Zilberman, David, 2023. "Algae-Based Two-Stage Supply Chain with Co-Products," Ecological Economics, Elsevier, vol. 207(C).
    14. Bellemare, Marc F. & Lee, Yu Na & Novak, Lindsey, 2021. "Contract farming as partial insurance," World Development, Elsevier, vol. 140(C).
    15. Xiaoxue Du & Hernan Tejeda & Zhengliang Yang & Liang Lu, 2022. "A General-Equilibrium Model of Labor-Saving Technology Adoption: Theory and Evidences from Robotic Milking Systems in Idaho," Sustainability, MDPI, vol. 14(13), pages 1-17, June.
    16. Scott Kaplan & Ben Gordon & Feras El Zarwi & Joan L. Walker & David Zilberman, 2019. "The Future of Autonomous Vehicles: Lessons from the Literature on Technology Adoption," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 41(4), pages 583-597, December.
    17. Tejeda, Hernan A. & Chahine, Mireille & Du, Xiaoxue & Lu, Liang & Westerhold, Ashlee, 2020. "Investigating Factors Affecting Adoption of Automated Milking Systems (AMS) in Idaho," Western Economics Forum, Western Agricultural Economics Association, vol. 18(2), December.

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    Keywords

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    JEL classification:

    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

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