Price, Private Demand and Optimal Provision of Public R&D in Italian Agriculture

Roberto Esposti and Pierpaolo Pierani
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Pierpaolo Pierani: [n.a.]

No 238, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: The current paper presents a model in which public R&D stock is included as a quasi-fixed input in a variable cost function. Its price affects the long run desired level, while its shadow price indicates whether under (over) investment occurs in the short run. Two alternative R&D prices and - thus - two different long-run desired levels, are defined. One concerns the private (farmer) perspective, in which farmers express demand under the assumption of costless R&D. The other considers the societal point of view, in which the objective is the optimal public R&D supply conditioned on its cost. Application of the above model to the Italian agricultural context (1960-1995) suggests a significant difference between these private and social desired R&D levels. The latter are, on average, closer to the observed values, though over-investment has emerged since the mid-eighties.

Keywords: R&D price; public agricultural R&D; variable cost function (search for similar items in EconPapers)
JEL-codes: O30 Q16 (search for similar items in EconPapers)
Pages: 31
Date: 2005-06
New Economics Papers: this item is included in nep-agr
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Citations: View citations in EconPapers (1)

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