 SEQUENTIAL INVESTMENT IN SITE-SPECIFIC CROP MANAGEMENT UNDER OUTPUT PRICE UNCERTAINTYMurat Isik, Madhu Khanna and Alex Winter-Nelson Journal of Agricultural and Resource Economics, 2001, vol. 26, issue 01, 18 Abstract: An option-value model is developed to analyze the impacts of output price uncertainty, high sunk costs of adoption, and site-specific conditions on the optimal timing of adoption of two interrelated site-specific technologies, soil testing and variable rate technology (VRT). The model incorporates the potential for adopting these two technologies jointly or sequentially. The implications of the pattern of adoption for nitrogen pollution and for the design of a cost-share subsidy policy to accelerate the adoption of these technologies to reduce nitrogen pollution are also analyzed. Ignoring the potential for sequential adoption would tend to underpredict the adoption so soil testing and overpredict the adoption of VRT. Cost-share subsidies to induce accelerated adoption of VRT would be most effective at reducing nitrogen pollution if targeted toward fields with relatively high spatial variability in soil quality or soil fertility, and either low average soil quality or low average soil fertility. Keywords: Demand; and; Price; Analysis (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:ags:jlaare:31161 Access Statistics for this article More articles in Journal of Agricultural and Resource Economics from Western Agricultural Economics Association Contact information at EDIRC. |
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