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The Calculation of Research Benefits with Linear and Nonlinear Specifications of Demand and Supply Functions

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  • Jan P. Voon
  • Geoff W. Edwards

Abstract

This paper provides a comparison of research benefits for linear and nonlinear constant elasticity (NLCE) specifications of supply and demand with a pivotal supply shift framework. The comparison allows for a sensitivity test of results to different values for demand and supply elasticity. The main finding is that the values of the gross annual research benefits calculated for the NLCE specification are larger than those calculated for the linear specification with price-elastic supply but are smaller with price-inelastic supply. The analysis suggests that the use of an NLCE specification and a pivotal shift due to research is usually preferable to use of a linear supply curve with pivotal shift.

Suggested Citation

  • Jan P. Voon & Geoff W. Edwards, 1991. "The Calculation of Research Benefits with Linear and Nonlinear Specifications of Demand and Supply Functions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(2), pages 415-420.
    • Handle: RePEc:oup:ajagec:v:73:y:1991:i:2:p:415-420.
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    File URL: http://hdl.handle.net/10.2307/1242725
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    Cited by:

    1. Takeshima, Hiroyuki, 2009. "Sensitivity of welfare effects estimated by equilibrium displacement model: a biological productivity growth for semi-subsistence crop in Sub-Sahara African market with high transactions costs," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49287, Agricultural and Applied Economics Association.
    2. Shubham Gupta & Abhishek Roy & Subodha Kumar & Ram Mudambi, 2023. "When Worse Is Better: Strategic Choice of Vendors with Differentiated Capabilities in a Complex Cocreation Environment," Management Science, INFORMS, vol. 69(5), pages 2833-2851, May.
    3. McVey, Marty Jay, 1996. "Valuing quality differentiated grains from a total logistics perspective," ISU General Staff Papers 1996010108000012326, Iowa State University, Department of Economics.
    4. Salayo, Nerissa D., 2000. "Investment Opportunities for the Shrimp Processing Industry in the Philippines: Results from a Hedonic Analysis," Discussion Papers DP 2000-12, Philippine Institute for Development Studies.
    5. Pannell, D. J., 1999. "On the estimation of on-farm benefits of agricultural research," Agricultural Systems, Elsevier, vol. 61(2), pages 123-134, August.
    6. Kamau, Mercy & Mills, Bradford F., 1998. "Technology, location and trade: Kenyan vegetables," Agricultural Systems, Elsevier, vol. 58(3), pages 395-415, November.
    7. Bradford F. Mills, 1998. "Ex Ante Research Evaluation and Regional Trade Flows: Maize in Kenya," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(3), pages 393-408, September.
    8. Chung, Chanjin & Kaiser, Harry M., 1998. "Distribution of Gains from Research and Promotion in Multi-Stage Production Systems: Further Results," Research Bulletins 122701, Cornell University, Department of Applied Economics and Management.
    9. Voon, J. P., 2000. "Measuring research benefits in an imperfect market: second reply," Agricultural Economics, Blackwell, vol. 22(2), pages 127-128, March.
    10. Stelios Katranidis & Gregory Kordas & Kostas Velentzas, 2003. "Welfare analysis and bootstrapping," Applied Economics Letters, Taylor & Francis Journals, vol. 10(6), pages 335-338.
    11. Giannis Karagiannis & Christos J. Pantzios, 2002. "To Comply or not to Comply with Policy Regulations ‐ the Case of Greek Cotton Growers: a Note," Journal of Agricultural Economics, Wiley Blackwell, vol. 53(2), pages 345-351, July.
    12. Demont, Matty & Tollens, Eric, 2001. "Uncertainties Of Estimating The Welfare Effects Of Agricultural Biotechnology In The European Union," Working Papers 31828, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
    13. Williams, Gary W. & Shumway, C. Richard & Love, H. Alan, 2002. "Returns to Soybean Producers from Investments in Promotion and Research," Agricultural and Resource Economics Review, Cambridge University Press, vol. 31(1), pages 97-111, April.
    14. Karagiannis, Giannis & Furtan, William Hartley, 2002. "The Effects of Supply Shifts on Producers' Surplus: the Case of Inelastic Linear Supply Curves," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 3(01), pages 1-7, January.
    15. Mayer, Holly & Furtan, W. H., 1999. "Economics of transgenic herbicide-tolerant canola: The case of western Canada," Food Policy, Elsevier, vol. 24(4), pages 431-442, August.
    16. Katranidis, Stelios D. & Velentzas, Kostas, 2000. "The Markets of Cotton Seed and Maize in Greece: Welfare Implications of the Common Agricultural Policy," Agricultural Economics Review, Greek Association of Agricultural Economists, vol. 1(2), pages 1-16, August.
    17. Davis, Jeff & Bantilan, Ma Cynthia S. & Nedumaran, Swanikannu & Charyulu, Deevi Kumara, 2014. "The importance of disaggregation for understanding research impacts and modelling adoption," 2014 Conference (58th), February 4-7, 2014, Port Macquarie, Australia 165820, Australian Agricultural and Resource Economics Society.
    18. Harvey A. Averch, 1994. "Economic Approaches To the Evaluation of Research," Evaluation Review, , vol. 18(1), pages 77-88, February.

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