Economic Hysteresis in Variety Selection

Timothy Richards and Gareth P. Green

Journal of Agricultural and Applied Economics, 2003, vol. 35, issue 01, 14

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 because of economic hysteresis. This study tests for hysteresis in the adoption of wine grape varieties 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 might be reduced by activities that smooth earnings over time.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
https://ageconsearch.umn.edu/record/37310/files/Ri ... E%20April%202003.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:joaaec:37310

DOI: 10.22004/ag.econ.37310

Access Statistics for this article

More articles in Journal of Agricultural and Applied Economics from Southern Agricultural Economics Association Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().