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Actual Versus Stated Willingness To Pay: A Comment

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  • Cohen, Daniel R.
  • Zilberman, David

Abstract

Offering evidence from the California Irrigation Management Information System (CIMIS) and centering around Kenkel and Norris conclusions regarding "Agricultural Producers' Willingness to Pay for Real-Time Mesoscale Weather Information," this article questions the use of growers' hypothetical willingness-to-pay responses as the sole basis for deciding whether to invest in Mesonet, a statewide network of weather station. Survey respondents' lack of familiarity with a new technology and strategic behavior lead to underestimates of actual willingness to pay. Moreover, weather information has numerous agricultural and nonagricultural uses, and only sampling growers overlooks gains to other potential users. Low hypothetical willingness-to-pay responses of a subsection of the potential adopters should necessarily discourage investment. Rather, a substantial willingness to pay may signal a need for further market research.

Suggested Citation

  • Cohen, Daniel R. & Zilberman, David, 1997. "Actual Versus Stated Willingness To Pay: A Comment," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 22(2), pages 1-6, December.
    • Handle: RePEc:ags:jlaare:30849
    DOI: 10.22004/ag.econ.30849
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    References listed on IDEAS

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    1. Edward K. Y. Chen, 1983. "The Diffusion of Technology," Palgrave Macmillan Books, in: Multinational Corporations, Technology and Employment, chapter 4, pages 69-93, Palgrave Macmillan.
    2. Darrell J. Bosch & Vernon R. Eidman, 1987. "Valuing Information When Risk Preferences Are Nonneutral: An Application to Irrigation Scheduling," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 69(3), pages 658-668.
    3. Kenkel, Philip L. & Norris, Patricia E., 1995. "Agricultural Producers' Willingness To Pay For Real-Time Mesoscale Weather Information," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 20(2), pages 1-17, December.
    4. Julian M. Alston & Philip G. Pardey & Jennifer S. James & Matthew A. Anderson, 2009. "The Economics of Agricultural R&D," Annual Review of Resource Economics, Annual Reviews, vol. 1(1), pages 537-566, September.
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    6. Douglas D. Parker & David Zilberman, 1996. "The use of information services: The case of CIMIS," Agribusiness, John Wiley & Sons, Ltd., vol. 12(3), pages 209-218.
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    Cited by:

    1. Taneja, Garima & Pal, Barun Deb & Joshi, Pramod Kumar & Aggarwal, Pramod & Tyagi, N.K., 2014. "Farmers’ preferences for climate-smart agriculture an assessment in the Indo-Gangetic plain:," IFPRI discussion papers 1337, International Food Policy Research Institute (IFPRI).
    2. Levy, A., 1999. "Profit and Non-Profit Maximising Network Density, Membership Fees and Service in Monopolistic and Duopolistic Framework," Economics Working Papers wp99-2, School of Economics, University of Wollongong, NSW, Australia.
    3. Garima Taneja & Barun Deb Pal & Pramod K. Joshi & Pramod K. Aggarwal & N. K. Tyagi, 2014. "Farmers’ Preferences for Climate-Smart Agriculture: An Assessment in the Indo-Gangetic Plain," Working Papers id:5806, eSocialSciences.

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