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Producer Risk, Product Complementarity And Product Diversification

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  • R. W. Fraser

Abstract

In this paper, a model is presented of the product diversification problem which features both producer risk aversion and product complementarity as determinants of product diversification. Although both risk aversion and product complementarity are, in the absence of the other, incentives to diversity production, when the two are present their joint influence may create a disincentive to diversification. In particular, an increase in the value of product complementarity may result in reduced product diversification for a risk‐averse producer.

Suggested Citation

  • R. W. Fraser, 1990. "Producer Risk, Product Complementarity And Product Diversification," Journal of Agricultural Economics, Wiley Blackwell, vol. 41(1), pages 103-107, January.
    • Handle: RePEc:bla:jageco:v:41:y:1990:i:1:p:103-107
    DOI: 10.1111/j.1477-9552.1990.tb00623.x
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    References listed on IDEAS

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    1. Robert A. Collins & Peter J. Barry, 1986. "Risk Analysis with Single-Index Portfolio Models: An Application to Farm Planning," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(1), pages 152-161.
    2. Just, Richard E & Zilberman, David, 1986. "Does the Law of Supply Hold under Uncertainty?," Economic Journal, Royal Economic Society, vol. 96(382), pages 514-524, June.
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    1. Fraser, Rob W., 1993. "Welfare Effects of and Supply Responses to Recent Australian Agricultural Policy Changes," Review of Marketing and Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 61(01), pages 1-7, April.
    2. Show‐Ling Jang & Ming‐Hung Weng & Yanzhi Wang, 2005. "Industrial Diversification and Its Impact on Productivity Growth in Taiwan's Electronics Industry," Asian Economic Journal, East Asian Economic Association, vol. 19(4), pages 423-443, December.
    3. Brajesh Jha & Nitesh Kumar & Biswajit Mohanty, 2009. "Pattern of Agricultural Diversification in India," Development Economics Working Papers 22923, East Asian Bureau of Economic Research.
    4. Culas, Richard J., 2014. "Determinants of land use in wheat production: The Australian wheat-sheep zone," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165826, Australian Agricultural and Resource Economics Society.
    5. Chaplin, Hannah & Davidova, Sophia & Gorton, Matthew, 2005. "Impediments to Employment and Enterprise Diversification: Evidence from Small-Scale Farms in Poland," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24760, European Association of Agricultural Economists.
    6. Weiss, Christoph R. & Briglauer, Wolfgang, 2000. "Determinants and Dynamics of Farm Diversification," FE Working Papers 0002, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
    7. McNamara, Kevin T. & Weiss, Christoph R., 2005. "Farm Household Income and On-and-Off Farm Diversification," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(1), pages 1-12, April.
    8. Brajesh Jha & Amarnath Tripathi & Biswajit Mohanty, 2009. "Drivers of Agricultural Diversification in India, Haryana and the Greenbelt Farms of India," Development Economics Working Papers 22922, East Asian Bureau of Economic Research.

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