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Hemp Production Network Effects: Are Producers Tipped Toward Suboptimal Varietal Selection By Their Neighbors?, Tanner Mccarty, Jeffrey Young
Hemp Production Network Effects: Are Producers Tipped Toward Suboptimal Varietal Selection By Their Neighbors?, Tanner Mccarty, Jeffrey Young
Journal of Applied Farm Economics
The 2018 farm bill removed industrial hemp from the Schedule 1 Controlled Substance List. In response, states scrambled to enact hemp legislation. Some hemp flower producers report their hemp fields were cross- pollinated by a neighbor growing a different hemp cultivar. For hemp flower crops, cross- pollination reduces cannabinoid concentration levels within the flower; these concentration levels dictate flower price. We show that in a repeated game, once a sufficiently large percentage of growers decide to plant hemp fiber/seed crops, cross-pollination forces flower growers to convert to fiber/seed to avoid the negative network externality. Over time, a stable, suboptimal Nash …