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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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  1. Oriana Bandiera & Imran Rasul, 2002. "Social Networks and Technology Adoption in Northern Mozambique," STICERD - Development Economics Papers - From 2008 this series has been superseded by Economic Organisation and Public Policy Discussion Papers 35, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  2. Mark Rosenzweig & Andrew D. Foster, . "Learning by Doing and Learning from Others: Human Capital and Technical Change in Agriculture," Home Pages _068, University of Pennsylvania.
  3. Christine M. Moser & Christopher B. Barrett, 2006. "The complex dynamics of smallholder technology adoption: the case of SRI in Madagascar," Agricultural Economics, International Association of Agricultural Economists, vol. 35(3), pages 373-388, November.
  4. Bertrand, M. & Luttmer, E.F.P. & Mullainathan, S., 1998. "Network Effects and Welfare Cultures," Papers 201, Princeton, Woodrow Wilson School - Public and International Affairs.
  5. Besley, Timothy & Case, Anne, 1993. "Modeling Technology Adoption in Developing Countries," American Economic Review, American Economic Association, vol. 83(2), pages 396-402, May.
  6. Huffman, Wallace & Mercier, S., 1991. "Joint Adoption of Microcomputer Technologies: An Analysis of Farmers' Decisions," Staff General Research Papers 10989, Iowa State University, Department of Economics.
  7. Feder, Gershon & Just, Richard E & Zilberman, David, 1985. "Adoption of Agricultural Innovations in Developing Countries: A Survey," Economic Development and Cultural Change, University of Chicago Press, vol. 33(2), pages 255-98, January.
  8. Jovanovic, B. & Nyarko, Y., 1996. "Learning by Doing and the Choice of Technology," Working Papers 96-25, C.V. Starr Center for Applied Economics, New York University.
  9. Timothy G. Conley & Christopher R. Udry, 2005. "Learning about a new technology: pineapple in Ghana," Proceedings, Federal Reserve Bank of San Francisco.
  10. Sunding, David & Zilberman, David, 2001. "The agricultural innovation process: Research and technology adoption in a changing agricultural sector," Handbook of Agricultural Economics, in: B. L. Gardner & G. C. Rausser (ed.), Handbook of Agricultural Economics, edition 1, volume 1, chapter 4, pages 207-261 Elsevier.
  11. Goolsbee, Austan & Klenow, Peter J, 2002. "Evidence on Learning and Network Externalities in the Diffusion of Home Computers," Journal of Law and Economics, University of Chicago Press, vol. 45(2), pages 317-43, October.
  12. KS Pietola & AO Lansink, 2001. "Farmer response to policies promoting organic farming technologies in Finland," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 28(1), pages 1-15, March.
  13. Jeremy G. Weber, 2012. "Social learning and technology adoption: the case of coffee pruning in Peru," Agricultural Economics, International Association of Agricultural Economists, vol. 43, pages 73-84, November.
  14. Stoneman, Paul L & David, Paul A, 1986. "Adoption Subsidies vs Information Provision as Instruments of Technology Policy," Economic Journal, Royal Economic Society, vol. 96(380a), pages 142-50, Supplemen.
  15. Kapur, Sandeep, 1995. "Technological Diffusion with Social Learning," Journal of Industrial Economics, Wiley Blackwell, vol. 43(2), pages 173-95, June.
  16. Jean-Philippe Gervais & Rémy Lambert & François Boutin-Dufresne, 2001. "On the Demand for Information Services: An Application to Lowbush Blueberry Producers in Eastern Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 49(2), pages 217-232, 07.
  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.
  18. Lohr, Luanne & Salomonsson, Lennart, 1998. "Conversion Subsidies For Organic Production: Results From Sweden And Lessons For The United States," Faculty Series 16640, University of Georgia, Department of Agricultural and Applied Economics.
  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. Dinar, Ariel & Yaron, Dan, 1990. "Influence Of Quality And Scarcity Of Inputs On The Adoption Of Modern Irrigation Technologies," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 15(02), December.
  21. Wozniak, Gregory D, 1993. "Joint Information Acquisition and New Technology Adoption: Late versus Early Adoption," The Review of Economics and Statistics, MIT Press, vol. 75(3), pages 438-45, August.
  22. McFadden, Daniel L & Train, Kenneth E, 1996. "Consumers' Evaluation of New Products: Learning from Self and Others," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 683-703, August.
  23. Evenson, Robert E. & Westphal, Larry E., 1995. "Technological change and technology strategy," Handbook of Development Economics, in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 37, pages 2209-2299 Elsevier.
  24. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, vol. 69, pages 213.
  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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