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Informational Cascades and Technology Adoption: Evidence from Greek and German Organic Growers

  • Konstantinos Chatzimichael

    ()

    (Dept of Economics, University of Crete, Greece)

  • Margarita Genius

    ()

    (Department of Economics, University of Crete, Greece)

  • Vangelis Tzouvelekas

    ()

    (Department of Economics, University of Crete, Greece)

The present study aims to empirically analyze the competing effects of social interactions and conversion subsidies on the adoption of organic farming practices for two samples of olive and cereal growers in Greece and Germany, respectively. To this end we construct two alternative indicators to capture informational cascades created in rural areas, one based on demographic characteristics and one on profitability considerations. Building upon the theoretical findings of Foster and Rosenweig (1995), Munshi (2004), Bandiera and Rasul (2006) and Weber (2012), we find that informational cascades are indeed important in revising farmers' perceptions and adoption behavior in both rural areas of Europe. Our results show that conversion subsidies can enhance social network effects internalizing informational externalities even in areas where there is already a critical mass of adopters.

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Paper provided by University of Crete, Department of Economics in its series Working Papers with number 1102.

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Date of creation: 20 Mar 2011
Date of revision: 12 Mar 2013
Handle: RePEc:crt:wpaper:1102
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  17. Huffman, Wallace E, 1977. "Allocative Efficiency: The Role of Human Capital," The Quarterly Journal of Economics, MIT Press, vol. 91(1), pages 59-79, February.
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  19. Just, Richard E & Zilberman, David, 1983. "Stochastic Structure, Farm Size and Technology Adoption in Developing Agriculture," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 307-28, July.
  20. Lohr, Luanne & Salomonsson, Lennart, 2000. "Conversion subsidies for organic production: results from Sweden and lessons for the United States," Agricultural Economics of Agricultural Economists, International Association of Agricultural Economists, vol. 22(2), March.
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  25. Rahm, M. & Huffman, Wallace, 1984. "The Adoption of Reduced Tillage: The Role of Human Capital and Other Variables," Staff General Research Papers 10977, Iowa State University, Department of Economics.
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