Social learning and parameter uncertainty in irreversible investments: Evidence from greenhouse adoption in northern China

Honglin Wang, Fan Yu, Thomas Reardon, Jikun Huang and Scott Rozelle

China Economic Review, 2013, vol. 27, issue C, 104-120

Abstract: This paper aims at an important gap in the literature, which has not modeled the effect of social learning in a real option context and examined uncertainty-reduction measures through social learning. This paper addresses the gap by modeling social learning as a way of reducing parameter uncertainty, thus facilitating technology adoption and shortening the waiting time in irreversible investments. We use household-level data on intermediate-technology greenhouse adoption in northern China to test the predictions in both a linear probability model and a duration analysis. Our empirical findings support the hypothesis. We also find that market volatility and insecure land property rights discourage adoption.

Keywords: Social learning; Technology adoption; Irreversible investment; Greenhouse; China (search for similar items in EconPapers)
JEL-codes: D83 O12 Q16 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Social Learning and Parameter Uncertainty in Irreversible Investment----Evidence from Greenhouse Adoption in Northern China (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:27:y:2013:i:c:p:104-120

DOI: 10.1016/j.chieco.2013.09.003

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