Distribution of Research Gains in Multistage Production Systems: a General Equilibrium Analysis of Wool

George Verikios

No 06-02, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: The seminal work of Freebairn, Davis and Edwards (FDE, 1982) showed that in a multistage production system, research that reduces production costs at one stage provides benefits to producers at all stages and to consumers. This work assumed a partial equilibrium environment, while producers operate in general equilibrium. We apply a general equilibrium model to investigate the importance of the economic environment in the distribution of research gains in an extreme example of a multistage production system: wool. Our results do not support FDE’s conclusions with regard to the distribution of benefits to producers across production stages – research in a multistage production system that reduces production costs at one stage will not necessarily provide benefits to producers at all stages.

Keywords: economic surplus; general equilibrium; multistage production; research benefits; wool (search for similar items in EconPapers)
Pages: 30 pages
Date: 2006
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https://ecompapers.biz.uwa.edu.au/paper/PDF%20of%2 ... hiswick%2C%20B.R.pdf First version, 2006 (application/pdf)

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Working Paper: Distribution of Research Gains in Multistage Production Systems: A General Equilibrium Analysis of Wool (2006)
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