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Returns to Public Investments in Agriculture with Imperfect Downstream Competition

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  • Stephen F. Hamilton
  • David Sunding

Abstract

A multiple-market framework is developed to measure the size and distribution of research benefits. The model considers an upstream raw product market and a downstream finished productmarket and allows for imperfect competition in the intermediary food-processing sector. A central conceptual result is derived: an increase in raw product output is a sufficient condition for cost-reducing innovations in the farm sector to increase social welfare. A special case of linear farm supply and isoelastic processing production functions reveals that necessary conditions for welfare to decrease are a convergent farm supply shift, an oligopsonistic upstream market configuration, and increasing returns-to-scale processing technology. Copyright 1998, Oxford University Press.

Suggested Citation

  • Stephen F. Hamilton & David Sunding, 1998. "Returns to Public Investments in Agriculture with Imperfect Downstream Competition," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 830-838.
    • Handle: RePEc:oup:ajagec:v:80:y:1998:i:4:p:830-838
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    Citations

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    Cited by:

    1. J. A. L. Cranfield, 2003. "Optimal Collective Investment in Generic Advertising, Export Market Promotion and Cost-of-Production-Reducing Research," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 51(3), pages 299-321, November.
    2. Alston, Julian M. & Sexton, Richard J. & Zhang, Mingxia, 1999. "Imperfect competition, functional forms, and the size and distribution of research benefits," Agricultural Economics, Blackwell, vol. 21(2), pages 155-172, October.
    3. João Ricardo Faria & Franklin G. Mixon, 2016. "Farmer-Entrepreneurs, Agricultural Innovation, and Explosive Research and Development Cycles," Administrative Sciences, MDPI, vol. 6(4), pages 1-11, September.
    4. Kaittisak Kumse & Nobuhiro Suzuki & Takeshi Sato, 2020. "Does oligopsony power matter in price support policy design? Empirical evidence from the Thai Jasmine rice market," Agricultural Economics, International Association of Agricultural Economists, vol. 51(3), pages 373-385, May.
    5. Lei, Lei, 2018. "Effects of trade policy on technological innovation in agricultural markets - implications for the developing economies," IDE Discussion Papers 687, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    6. Philippe Bontems & Nicolas Gruyer, 2007. "When cost improvements harm consumers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 30(1), pages 63-79, February.
    7. Richards, Timothy J. & Padilla, Luis, 2002. "Commodity R&D And Promotion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 34(3), pages 1-15, December.
    8. Bontems, Philippe & Bouamra-Mechemache, Zohra, 2003. "Predatory Accommodation In Vertical Contracting With Externalities," 2003 Annual meeting, July 27-30, Montreal, Canada 22044, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    9. Sizhong Sun & Sajid Anwar, 2018. "Product innovation in China’s food processing industries," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 42(3), pages 492-507, July.
    10. Richards, Timothy J. & Padilla, Luis, 2001. "Commodity R&D, Patenting, And Promotion," 2001 Annual meeting, August 5-8, Chicago, IL 20497, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Frisvold, George B. & Sullivan, John & Raneses, Anton, 2003. "Genetic improvements in major US crops: the size and distribution of benefits," Agricultural Economics, Blackwell, vol. 28(2), pages 109-119, March.
    12. Sexton, Richard J. & Sexton, Terri A., 2000. "Measuring research benefits in an imperfect market: reply to Holloway," Agricultural Economics, Blackwell, vol. 22(2), pages 129-131, March.
    13. Jianyu Yu & Zohra Bouamra-Mechemache, 2016. "Production standards, competition and vertical relationship," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 43(1), pages 79-111.
    14. Zhang, Mingxia & Sexton, Richard J., 2000. "Optimal Commodity Promotion In Imperfectly Competitive Markets," 2000 Annual meeting, July 30-August 2, Tampa, FL 21823, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    15. Peretz, Jean H. & Das, Sujit & Tonn, Bruce E., 2009. "Evaluating knowledge benefits of automotive lightweighting materials R&D projects," Evaluation and Program Planning, Elsevier, vol. 32(3), pages 300-309, August.

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