Product concentration and usage: Behavioral effects in the glyphosate market
Edward Perry,
David Hennessy and
GianCarlo Moschini
Journal of Economic Behavior & Organization, 2019, vol. 158, issue C, 543-559
Abstract:
People often ignore or misunderstand information that would help them make better decisions. For products that differ by concentration level, a critical choice concerns the correct dosage rate. We study the effects of changing glyphosate product concentration levels on farmers’ glyphosate usage behavior. Glyphosate is the world's most widely used herbicide. After glyphosate went off patent in 2000, product variants with higher concentration levels entered the market. Using detailed farm-level glyphosate use data in U.S. corn and soybeans over the period 1998–2011, we estimate the impact of product concentration levels on glyphosate application rates. We control for prices and other sources of heterogeneity by means of individual and time fixed effects. Our findings indicate that increasing the baseline concentration level by 10% increases the application rate by nearly 6%, despite the fact that labels on more concentrated products provide instructions on how to correctly adjust dosage rates downwards. We attribute part of the concentration effect to rational behavior and part of it to label confusion and/or habit, with smaller farms and late adopters being more likely to resort to habit. A counterfactual simulation predicts that label confusion and/or habit was responsible for a 4.6% increase in total glyphosate use and an additional $59 million per year (4.7%) in glyphosate sellers’ revenues.
Keywords: Behavioral effects; Glyphosate; Heuristics; Label complexity; Product formulation (search for similar items in EconPapers)
JEL-codes: D22 D83 D90 Q12 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)
Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0167268118303561
Full text for ScienceDirect subscribers only
Related works:
Working Paper: Product Concentration and Usage: Behavioral Effects in the Glyphosate Market (2019) 
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:eee:jeborg:v:158:y:2019:i:c:p:543-559
DOI: 10.1016/j.jebo.2018.12.027
Access Statistics for this article
Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D.
More articles in Journal of Economic Behavior & Organization from Elsevier
Bibliographic data for series maintained by Catherine Liu ().