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Supply And Demand Functions For Uk Agriculture: Biases Of Technical Change And The Returns To Public R&D

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  • Yougesh Khatri
  • Colin Thirtle

Abstract

This study is the first UK application of the integrated, single‐stage approach to estimating the returns to R&D. Fitting a residual profit function, which incorporates the technology variables, to new data for UK agriculture for 1954–1990 produces short‐ and long‐run estimates of the output supply and input‐demand price elasticities, elasticities of the effects of relaxing the non‐variable input constraints and shadow prices for these non‐variable factors. All of the supply and demand relationships are found to be inelastic, but the price‐responsiveness of the system has increased over time. The long‐run model, in which all of the inputs except land are treated as variable and private‐sector research is included, gives a marginal rate of return to public agricultural R&D of only 18 per cent. Estimates of the factor‐saving biases of the technology variables suggest that public R&D has had its greatest effect in the animal sector.

Suggested Citation

  • Yougesh Khatri & Colin Thirtle, 1996. "Supply And Demand Functions For Uk Agriculture: Biases Of Technical Change And The Returns To Public R&D," Journal of Agricultural Economics, Wiley Blackwell, vol. 47(1‐4), pages 338-354, January.
    • Handle: RePEc:bla:jageco:v:47:y:1996:i:1-4:p:338-354
    DOI: 10.1111/j.1477-9552.1996.tb00697.x
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    1. Bailey, Alastair & Irz, Xavier T. & Balcombe, Kelvin George, 2003. "An Appliation Of The Stochastic Latent Variable Approach To The Correction Of Sector Level Tfp Calculations In The Face Of Biased Technological Change," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25842, International Association of Agricultural Economists.
    2. Unterschultz, James R. & Jeffrey, Scott R. & Quagrainie, Kwamena K., 2000. "Value-Adding 20 Billion By 2005: Impact At The Alberta Farm Gate," Project Report Series 24049, University of Alberta, Department of Resource Economics and Environmental Sociology.
    3. Thirtle, Colin G. & Piesse, Jenifer & Smith, Vincent H., 1997. "An economic approach to the structure, historical development and reform of agricultural R&D in the UK," Centre for Agricultural Strategy - Papers and Reports 337539, University of Reading.
    4. Esposti, Roberto & Pierani, Pierpaolo, 2000. "Modelling technical change in Italian agriculture: a latent variable approach," Agricultural Economics, Blackwell, vol. 22(3), pages 261-270, April.
    5. Barnes, Andrew P., 2002. "Publicly-funded UK agricultural R&D and 'social' total factor productivity," Agricultural Economics, Blackwell, vol. 27(1), pages 65-74, May.
    6. Farrington, John & Thirtle, Colin & Henderson, Simon, 1997. "Methodologies for monitoring and evaluating agricultural and natural resources research," Agricultural Systems, Elsevier, vol. 55(2), pages 273-300, October.
    7. C. Thirtle & P. Bottomley & P. Palladino & D. Schimmelpfennig & R. Townsend, 1998. "The rise and fall of public sector plant breeding in the United Kingdom: a causal chain model of basic and applied research and diffusion," Agricultural Economics, International Association of Agricultural Economists, vol. 19(1-2), pages 127-143, September.
    8. Colin Thirtle, 1999. "Productivity and the Returns to Levy‐Funded R&D for Sugar Production in the Eastern Counties of England," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(3), pages 450-467, September.
    9. Msangi, Siwa & Rosegrant, Mark, 2007. "A Closer Look at the IMPACT of Climate Change on Country-Level Food Security and Nutrition," Conference papers 331635, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    10. Thirtle, Colin & Palladino, Paolo & Piesse, Jenifer, 1997. "On the organisation of agricultural research in the United Kingdom, 1945-1994: A quantitative description and appraisal of recent reforms," Research Policy, Elsevier, vol. 26(4-5), pages 557-576, December.
    11. Alston, Julian M., 2002. "Spillovers," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 46(3), pages 1-32.
    12. Kelvin Balcombe & Alastair Bailey & Iain Fraser, 2005. "Measuring the impact of R&D on Productivity from a Econometric Time Series Perspective," Journal of Productivity Analysis, Springer, vol. 24(1), pages 49-72, September.
    13. David Schimmelpfennig & Colin Thirtle, 1999. "The Internationalization Of Agricultural Technology: Patents, R&D Spillovers, And Their Effects On Productivity In The European Union And United States," Contemporary Economic Policy, Western Economic Association International, vol. 17(4), pages 457-468, October.
    14. Barnes, Andrew P., 2001. "Towards a framework for justifying public agricultural R&D: the example of UK agricultural research policy," Research Policy, Elsevier, vol. 30(4), pages 663-672, April.

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