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Technology Valuation Distributions With Heterogeneous Adopters

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  • Oehmke, James F.
  • Wolf, Christopher A.

Abstract

This paper examines technology benefit allocation between an innovating firm and heterogeneous technology adopters. Using a triangular distribution of adopter innovation value, we find that as the upper bound increases, optimal innovation price increases, but at a slower rate. Similarly, as the lower bound decreases, price decreases and producer benefits increase. Finally, greater producer heterogeneity leads to greater producer benefits from innovation in non-competitive markets. An empirical application of the model is considered, bovine somatotropin adoption on dairy farms. The model generates an intuitive explanation of the common finding that average adopters are making zero or negative profits.

Suggested Citation

  • Oehmke, James F. & Wolf, Christopher A., 2002. "Technology Valuation Distributions With Heterogeneous Adopters," 2002 Annual meeting, July 28-31, Long Beach, CA 19777, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea02:19777
    DOI: 10.22004/ag.econ.19777
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    References listed on IDEAS

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    1. Jeffrey Hyde & Marshall A. Martin & Paul V. Preckel & C. Richard Edwards, 1999. "The Economics of Bt Corn: Valuing Protection from the European Corn Borer," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(2), pages 442-454.
    2. Zdenko Stefanides & Loren W. Tauer, 1999. "The Empirical Impact of Bovine Somatotropin on a Group of New York Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 81(1), pages 95-102.
    3. Jeremy D. Foltz & Hsiu-Hui Chang, 2002. "The Adoption and Profitability of rbST on Connecticut Dairy Farms," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(4), pages 1021-1032.
    4. Saha Atanu & H. Alan Love & Robert Schwart, 1994. "Adoption of Emerging Technologies Under Output Uncertainty," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 836-846.
    5. Matin Qaim, 1999. "Potential Benefits of Agricultural Biotechnology: An Example from the Mexican Potato Sector," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 21(2), pages 390-408.
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