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Several quantitative methods have been developed to evaluate the Impacts oftechnological change on U.S. agriculture. The major weakness of prevailing models isthat they consider the impact of technology on supply alone and are based on partialequilibrium analysis in one market. The use of partial equilibrium analysis ignorescross-market effect. For most goods, a supply shift directly affects quantity demandedby reducing the price of the commodity along a given demand curve. The resultingchange in the equilibrium price may affect demand for substitute and complimentarygoods, which in turn affect demand for the commodity being considered.The primary objective of this paper is to analyze price effects and substitutioneffects of technological change in interrelated markets. An econometric model wasdeveloped and applied to the beef and pork industries to measure the social impacts oftechnological change. The multimarket supply-demand model developed in this paperincludes technology variables in the specification of supply functions and the modelexplicitly accounts for the fact that technological change in one market influencesdemand for related productsThis paper evaluates the welfare impact of technological change through theconsumer-producer surplus model that incorporates the interaction of demandrelationships for beef and pork. The results indicate that total returns for technologicalchange in beef and pork are high. Technological change in beef affects economicsurpluses in the pork market and technological change in pork affects economicsurpluses in the beef market. The actual allocation of expenditures for technologicaldevelopment over the study period (1960-1988) was 70% for beef and 30% for pork.However, the optimal allocation would have been a 40-60 split between beef and pork.

Subject(s): Agricultural and Food Policy

Research and Development/Tech Change/Emerging Technologies

Issue Date: 1991-07

Publication Type: Working or Discussion Paper

PURL Identifier: http://purl.umn.edu/140530

Total Pages: 22

Series Statement: Series No. 91-9

Record appears in: University of Idaho > Department of Agricultural Economics and Rural Sociology > A.E. Research Series





Autor: Araji, A.A. ; White, Fred C.

Fuente: http://ageconsearch.umn.edu/record/140530?ln=en







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