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Distribution of Research Gains in Multistage Production Systems: a General Equilibrium Analysis of Wool

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  • George Verikios

    (Department of Economics, The University of Western Australia)

Abstract

The seminal work of Freebairn, Davis and Edwards (FDE, 1982) showed that in a multistage production system, research that reduces production costs at one stage provides benefits to producers at all stages and to consumers. This work assumed a partial equilibrium environment, while producers operate in general equilibrium. We apply a general equilibrium model to investigate the importance of the economic environment in the distribution of research gains in an extreme example of a multistage production system: wool. Our results do not support FDE’s conclusions with regard to the distribution of benefits to producers across production stages – research in a multistage production system that reduces production costs at one stage will not necessarily provide benefits to producers at all stages.

Suggested Citation

  • George Verikios, 2006. "Distribution of Research Gains in Multistage Production Systems: a General Equilibrium Analysis of Wool," Economics Discussion / Working Papers 06-02, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:06-02
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    References listed on IDEAS

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    1. J. M. Alston & G. M. Scobie, 1983. "Distribution of Research Gains in Multistage Production Systems: Comment," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 353-356.
    2. Seale, James L., Jr. & Regmi, Anita & Bernstein, Jason, 2003. "International Evidence On Food Consumption Patterns," Technical Bulletins 33580, United States Department of Agriculture, Economic Research Service.
    3. J. W. Freebairn & J. S. Davis & G. W. Edwards, 1983. "Distribution of Research Gains in Multistage Production Systems: Reply," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 65(2), pages 357-359.
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    5. J. W. Freebairn & J. S. Davis & G. W. Edwards, 1982. "Distribution of Research Gains in Multistage Production Systems," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 64(1), pages 39-46.
    6. Geoff W. Edwards & John W. Freebairn, 1984. "The Gains from Research into Tradable Commodities," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(1), pages 41-49.
    7. Michael K. Wohlgenant, 1993. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: The Case of the U.S. Beef and Pork Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 642-651.
    8. John D. Mullen & Julian M. Alston & Michael K. Wohlgenant, 1989. "The Impact Of Farm And Processing Research On The Australian Wool Industry," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 33(1), pages 32-47, April.
    9. Matthew W. Peter & Mark Horridge & G.A.Meagher & Fazana Naqvi & B.R.Parmenter, 1996. "The Theoretical Structure of MONASH-MRF," Centre of Policy Studies/IMPACT Centre Working Papers op-85, Victoria University, Centre of Policy Studies/IMPACT Centre.
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