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Market Imperfections and Farm Technology Adoption Decisions - A Case Study from the Highlands of Ethiopia

Author

Listed:
  • Yesuf, Mahmud

    (Environmental Economics Policy Forum for Ethiopia, Ethiopian Development Research Institute)

  • Köhlin, Gunnar

    (Department of Economics, School of Business, Economics and Law, Göteborg University)

Abstract

This paper investigates the impacts of market and institutional imperfections on technology adoption in a model that considers fertilizer use and soil conservation to be joint decisions. Controlling for plot characteristics and other factors, we found that a household’s decision to adopt fertilizer significantly and negatively depends on whether the same household adopts soil conservation. The reverse causality, however, was insignificant. We also found that outcomes of market imperfections, such as limited access to credit, plot size, risk considerations, and rates-of-time preference, were significant factors in explaining variations in farm technology adoption decisions. Relieving the existing market imperfections will most likely increase the adoption rate of farm technologies.

Suggested Citation

  • Yesuf, Mahmud & Köhlin, Gunnar, 2009. "Market Imperfections and Farm Technology Adoption Decisions - A Case Study from the Highlands of Ethiopia," Working Papers in Economics 403, University of Gothenburg, Department of Economics.
    • Handle: RePEc:hhs:gunwpe:0403
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    Cited by:

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    2. Debela, Diriba Dadi & Stellmacher, Till & Azadi, Hossein & Kelboro, Girma & Lebailly, Philippe & Ghorbani, Mehdi, 2020. "The Impact of Industrial Investments on Land Use and Smallholder Farmers’ Livelihoods in Ethiopia," Land Use Policy, Elsevier, vol. 99(C).
    3. Aslihan Arslan & Kristin Floress & Christine Lamanna & Leslie Lipper & Solomon Asfaw & Todd Rosenstock, 2020. "IFAD RESEARCH SERIES 63 - The adoption of improved agricultural technologies - A meta-analysis for Africa," IFAD Research Series 304758, International Fund for Agricultural Development (IFAD).
    4. Enid M. Katungi & Catherine Larochelle & Josephat R. Mugabo & Robin Buruchara, 2018. "The effect of climbing bean adoption on the welfare of smallholder common bean growers in Rwanda," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 10(1), pages 61-79, February.
    5. Mekonnen, Alemu & Damte, Abebe, 2011. "Private Trees as Household Assets and Determinants of Tree-Growing Behavior in Rural Ethiopia," RFF Working Paper Series dp-11-14-efd, Resources for the Future.
    6. Hassen, Sied, 2018. "The effect of farmyard manure on the continued and discontinued use of inorganic fertilizer in Ethiopia: An ordered probit analysis," Land Use Policy, Elsevier, vol. 72(C), pages 523-532.
    7. Larson, Donald F. & Gurara, Daniel Zerfu, 2013. "A conceptual model of incomplete markets and the consequences for technology adoption policies in Ethiopia," Policy Research Working Paper Series 6681, The World Bank.
    8. Ngokkuen, Chuthaporn & Grote, Ulrike, 2012. "Geographical Indication for Jasmine Rice: Applying a Logit Model to Predict Adoption Behavior of Thai Farm Households," Quarterly Journal of International Agriculture, Humboldt-Universitaat zu Berlin, vol. 51(2), pages 1-29, May.
    9. Carolyn Afolami & Abiodun Obayelu & Ignatius Vaughan, 2015. "Welfare impact of adoption of improved cassava varieties by rural households in South Western Nigeria," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 3(1), pages 1-17, December.
    10. Maurice Ogada & Germano Mwabu & Diana Muchai, 2014. "Farm technology adoption in Kenya: a simultaneous estimation of inorganic fertilizer and improved maize variety adoption decisions," Agricultural and Food Economics, Springer;Italian Society of Agricultural Economics (SIDEA), vol. 2(1), pages 1-18, December.
    11. Maurice Ochieng’ Ombok & Maurice Juma Ogada, 2018. "Understanding the paradox of rising consumption of alternative medicine in Kenya," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 20(5), pages 2107-2117, October.

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    More about this item

    Keywords

    Bivariate probit; fertilizer adoption; market imperfections; risk aversion; time preferences; soil conservation;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • Q12 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Micro Analysis of Farm Firms, Farm Households, and Farm Input Markets
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land

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