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Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

  • Ferguson, Shon

    ()

    (Research Institute of Industrial Economics (IFN))

  • Olfert, Rose

    (Johnson-Shoyama Graduate School of Public Policy)

We measure the impact of the removal of a railway transportation subsidy on the adoption of technology for Western Canadian farms, using a unique combination of Census and freight rate data. We exploit the large regional variation in these one-time freight rate increases in order to identify causal effects of increased competitive pressure. Using a difference-in-differences methodology we find that higher freights rates – and hence lower farm gate prices – induced farmers to adopt new, more efficient production technology. We also find that farmers experiencing the greatest transportation cost increases also increased fertilizer usage and made significant land use changes.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 966.

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Length: 28 pages
Date of creation: 31 May 2013
Date of revision:
Handle: RePEc:hhs:iuiwop:0966
Contact details of provider: Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Phone: +46 8 665 4500
Fax: +46 8 665 4599
Web page: http://www.ifn.se/
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  1. Catherine J. Morrison Paul & Warren E. Johnston & Gerald A. G. Frengley, 2000. "Efficiency in New Zealand Sheep and Beef Farming: The Impacts of Regulatory Reform," The Review of Economics and Statistics, MIT Press, vol. 82(2), pages 325-337, May.
  2. Chavas, Jean-Paul & Holt, Matthew T, 1996. "Economic Behavior under Uncertainty: A Joint Analysis of Risk Preferences and Technology," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 329-35, May.
  3. K. K. Klein & W. A. Kerr, 1996. "The Crow Rate Issue: A Retrospective on the Contributions of the Agricultural Economics Profession in Canada," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(1), pages 1-18, 03.
  4. Troy G. Schmitz & Tim Highmoor & Andrew Schmitz, 2002. "Termination of the WGTA: An Examination of Factor Market Distortions, Input Subsidies anc Compensation," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 50(3), pages 333-347, November.
  5. James A. Schmitz Jr., 2005. "What Determines Productivity? Lessons from the Dramatic Recovery of the U.S. and Canadian Iron Ore Industries Following Their Early 1980s Crisis," Journal of Political Economy, University of Chicago Press, vol. 113(3), pages 582-625, June.
  6. Alla Lileeva & Daniel Trefler, 2010. "Improved Access to Foreign Markets Raises Plant-Level Productivity... for Some Plants," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1051-1099, August.
  7. 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.
  8. James Vercammen, 1996. "An Overview of Changes in Western Grain Transportation Policy," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 44(4), pages 397-402, December.
  9. S.N. Kulshreshtha & D.G. Devine, 1978. "Historical Perspective And Propositions On The Crowsnest Pass Freight Rate Agreement," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 26(2), pages 72-83, 07.
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