An analysis of risk aversion in biotechnology adoption: the case of US genetically modified corn

Do-il Yoo () and Jean-Paul Chavas ()
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Do-il Yoo: Seoul National University

Empirical Economics, 2021, vol. 60, issue 5, No 19, 2613-2635

Abstract: Abstract This paper analyzes the role of risk aversion in biotechnology adoption with the application on the US genetically modified corn. A dynamic programming analysis of technology adoption is conducted using the Kalman filter as a representation of the associated learning process. The relevant Bellman equation is jointly solved within model estimation using a minimum-distance estimator. Results show that the more the risk-averse farmers are, the later they adopt GM technology, such effects being statistically significant. Sensitivity analysis results examine the factors affecting farmers’ behavior. They document the role of risk aversion in technology adoption. They also uncover the presence of farm heterogeneity in the process of adopting a new technology.

Keywords: Biotechnology adoption; Kalman filter algorithm; Minimum-distance estimator (MDE); Risk aversion (search for similar items in EconPapers)
JEL-codes: C61 D81 O33 Q16 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s00181-020-01842-2

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