Risk and Fertilizer Use in the Rainfed Rice Ecosystem of Tarlac, Philippines

Abedullah and Sushil Pandey ()
Authors registered in the RePEc Author Service: Abedullah Anjum ()

Journal of Agricultural & Applied Economics, 2004, vol. 36, issue 1, pages 241-250

Abstract: Investing in a new perennial crop variety involves an irreversible commitment of capital and generates an uncertain return stream. As a result, the decision to adopt a new variety includes a significant real option value. Waiting for returns to rise above this real option causes a delay in adoption due to economic hysteresis. This study tests for hysteresis in wine grape-variety adoption using a sample of district-level data from the state of California. The empirical results show a significant hysteretic effect in wine grape investment, which may be reduced by activities that smooth earnings over time.

Keywords: expected utility; fertilizer; heteroscedastic production function; Just and Pope and Antle's technique; rainfed; risk aversion (search for similar items in EconPapers)
JEL-codes: Q12 (search for similar items in EconPapers)

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Journal of Agricultural & Applied Economics is edited by Jeffrey M. Gillespie

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