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Supply Chain Design and Adoption of Indivisible Technology

Liang Lu, Thomas Reardon and David Zilberman ()

No 212811, 2016 Allied Social Sciences Association (ASSA) Annual Meeting, January 3-5, 2016, San Francisco, California from Agricultural and Applied Economics Association

Abstract: In this paper, we develop a framework to analyze adoption of indivisible technologies by relatively small farms using a threshold diffusion model. It shows that different supply chains may emerge to enable the adoption of indivisible technologies. Independent technology dealers may buy the indivisible equipment and rent it to farmers, when the gain from adoption is not affected by scale or ownership of the technology. Also, larger farmers may buy the technology equipment and rent it (renting the machine per se or providing a set of services that includes use of the machinery for the farmer buying the service) to smaller farmers, especially when there are gains from scale or ownership. The paper derives equilibrium prices and quantities in the output, equipment, and technology rental market. These equilibrium prices and quantities depend on the heterogeneity of farmers and the features of the technology. Introduction of the new indivisible technology will benefit larger adopting farmers and consumers but may hurt non-adopters. We illustrate our conceptual findings with empirical examples.

Keywords: Agribusiness; Agricultural and Food Policy; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 31
Date: 2015
New Economics Papers: this item is included in nep-agr and nep-tid
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Journal Article: Supply Chain Design and Adoption of Indivisible Technology (2016) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ags:assa16:212811

DOI: 10.22004/ag.econ.212811

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