Emergence of Organic Farming under Imperfect Competition
This article explores the economic conditions for the viability of organic farming in a context of imperfect competition. While most research dealing with this issue has adopted an empirical approach, we propose a theoretical foundation. Farmers have a choice between two technologies, the conventional one using two complementary inputs, chemicals and seeds, and the organic one only requiring organic seeds. The upstream markets are oligopolistic and the firms adopt Cournot behavior. The game is solved backward. The equilibrium repartition of the farmers between both sectors is obtained by a free entry condition. Since multiple equilibria could exist, including the non emergence of organic farming, we spell out viability conditions for organic farming. Then, using an "infant industry" argument, we propose several public policy instruments able to support the development of organic farming, and assess their relative efficiency. Results could be useful to assess the conditions of emergence and viability of agricultural innovations in analogous contexts.
|Date of creation:||Dec 2012|
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"Putting their money where their mouths are: Consumer willingness to pay for multi-ingredient, processed organic food products,"
Elsevier, vol. 32(2), pages 145-159, April.
- Batte, Marvin T. & Hooker, Neal H. & Haab, Timothy C. & Beaverson, Jeremy, 2006. "Putting Their Money Where Their Mouths Are: Consumer Willingness to Pay for Multi-Ingredient, Processed Organic Food Products," Working Papers 204879, Ohio State University, Department of Agricultural, Environmental and Development Economics.
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- Jaeck, Melanie & Lifran, Robert, 2009. "Preferences, Norms and Constraints in farmers' agro-ecological choices. Case study using a choice experiments survey in the Rhone River Delta, France," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47948, Australian Agricultural and Resource Economics Society.
- Elodie Rouviere & Raphael Soubeyran, 2011. "Competition vs. quality in an industry with imperfect traceability," Economics Bulletin, AccessEcon, vol. 31(4), pages 3052-3067.
- Rouviere, Elodie & Soubeyran, Raphael, 2010. "Competition Vs. Quality In An Industry With Imperfect Traceability," 115th Joint EAAE/AAEA Seminar, September 15-17, 2010, Freising-Weihenstephan, Germany 116407, European Association of Agricultural Economists;Agricultural and Applied Economics Association.
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- Hayenga, Marvin L., 1998. "Structural Change in the Biotech Seed and Chemical Industrial Complex," Staff General Research Papers Archive 5000, Iowa State University, Department of Economics.
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