Returns to public investments in agriculture with imperfect downstream competition

• Published in: American journal of agricultural economics Vol. 80; no. 4; pp. 830 - 838
• Main Authors: Hamilton, Stephen F., Sunding, David
• Format: Journal Article
• Language: English
• Published: Menasha, Wis Oxford University Press 01.11.1998; American Agricultural Economics Association; American Farm Economic Association; Blackwell Publishing Ltd
• Subjects: Agricultural economics; Agricultural research; Agriculture; ANALISIS DE COSTOS Y BENEFICIOS; ANALYSE COUT AVANTAGE; Capital costs; Competition; COMPORTAMIENTO ECONOMICO; COMPORTEMENT ECONOMIQUE; COST BENEFIT ANALYSIS; COSTOS DE PRODUCCION; COUT DE PRODUCTION; Dairy industry; DEMAND FUNCTIONS; DIFFUSION DE LA RECHERCHE; DIFFUSION OF RESEARCH; DIFUSION DE LA INVESTIGACION; ECONOMETRIA; ECONOMETRICS; ECONOMETRIE; ECONOMIC BEHAVIOUR; ECONOMIC IMPACT; Farmers; Farms; FONCTION DE DEMANDE; FONCTION DE PRODUCTION; Food; Food processing industry; FOOD TECHNOLOGY; FUNCIONES DE LA DEMANDA; FUNCIONES DE LA PRODUCCION; Imperfect competition; Industrial agriculture; Innovations; INVERSION PUBLICA; INVESTIGACION; INVESTISSEMENT PUBLIC; Investments; O330; OFERTA; OFFRE; oligopoly; Oligopsony; Process engineering; PRODUCTION COSTS; PRODUCTION FUNCTIONS; PROFIT FUNCTIONS; PROFITABILITY; PUBLIC INVESTMENT; Q160; RECHERCHE; RENTABILIDAD; RENTABILITE; research benefits; SOCIAL BENEFITS; Social welfare; SUPPLY; Sustainable agriculture; TECHNOLOGIE ALIMENTAIRE; TECNOLOGIA DE LOS ALIMENTOS; imperfect competition; research benefits; O330; oligopoly; oligopsony; Q160
• ISSN: 0002-9092; 1467-8276
• DOI: 10.2307/1244067

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.