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Welfare Effects of Technological Convergence in Processed Food Industries

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  • Jun Ruan
  • Munisamy Gopinath
  • Steven Buccola

Abstract

We develop a monopolistic competition model to investigate effects of international technological convergence on factor rewards, output composition, and welfare. Comparative static analysis indicates technological convergence improves the follower's—but impairs the leader's—international competitiveness. The leader's welfare improves unambiguously; the follower's welfare depends on the relative strength of convergence's income and terms-of-trade effects. We use data from seventeen food industries in thirty countries, 1993–2001, to test these analytical predictions. Evidence of convergence is found in thirteen of seventeen industries. Convergence lifts followers' relative wages and global value-added shares. Followers benefit from convergence's positive income effect. Leaders benefit from higher terms of trade. Copyright 2008, Oxford University Press.

Suggested Citation

  • Jun Ruan & Munisamy Gopinath & Steven Buccola, 2008. "Welfare Effects of Technological Convergence in Processed Food Industries," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(2), pages 447-462.
    • Handle: RePEc:oup:ajagec:v:90:y:2008:i:2:p:447-462
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    File URL: http://hdl.handle.net/10.1111/j.1467-8276.2007.01063.x
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    Cited by:

    1. Boland, Michael A. & Crespi, John M. & Silva, Jena & Xia, Tian, 2012. "Measuring the Benefits to Advertising under Monopolistic Competition," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(1), pages 1-12, April.
    2. repec:ags:jrapmc:122308 is not listed on IDEAS
    3. Gong, Binlei, 2020. "Measuring and Achieving World Agricultural Convergence," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304347, Agricultural and Applied Economics Association.
    4. Lingran Yuan & Shurui Zhang & Shuo Wang & Zesen Qian & Binlei Gong, 2021. "World agricultural convergence," Journal of Productivity Analysis, Springer, vol. 55(2), pages 135-153, April.

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