Endogenous Technology Adoption Under Production Risk: Theory and Application to Irrigation Technology

Phoebe Koundouri (), Celine Nauges and Vangelis Tzouvelekas

MPRA Paper from University Library of Munich, Germany

Abstract: The main objective of this paper is to present a theoretical framework that conceptualizes technology adoption as a decision process involving information acquisition by farmers who face yield uncertainty and vary in their risk preferences. This is done by integrating the microeconomic foundations used to analyze production uncertainty at the farm level with the traditional technological adoption models. First we follow the approach of Antle (1987) based on higher-order moments of profit, which enables flexible estimation of the stochastic technology without ad hoc specification of risk preferences. Then individual risk preferences are derived, which are then used to explain farmer’s decision to adopt modern water saving technologies. The proposed model is applied to a randomly selected sample of 265 farms located in Crete, Greece. Results show that risk preferences affect the probability of adoption and provide evidence that farmers invest in new technologies as a means of hedging against input related production risk.

Keywords: risk attitudes; technology adoption; stochastic agricultural production; moments-based estimation (search for similar items in EconPapers)
JEL-codes: C0 C3 C36 D0 O3 Q1 (search for similar items in EconPapers)
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/122403/1/MPRA_paper_122403.pdf original version (application/pdf)

Related works:
Working Paper: Endogenous Technology Adoption Under Production Risk: Theory and Application to Irrigation Technology (2004)
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:pra:mprapa:122403

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().