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Returns To Public Investments In Agriculture With Imperfect Downstream Competition, Stephen F. Hamilton, David L. Sunding
Returns To Public Investments In Agriculture With Imperfect Downstream Competition, Stephen F. Hamilton, David L. Sunding
Economics
A multiple-market framework is developed to measure the size and distribution of research benefits. The model considers an upstream raw product market and a downstream finished product market and allows for imperfect competition in the intermediary food-processing sector. A central conceptual result is derived: an increase in raw product output is a sufficient condition for cost- reducing innovations in the farm sector to increase social welfare. A special case of linear farm supply and isoelastic processing production functions reveals that necessary conditions for welfare to decrease are a convergent farm supply shift, an oligopsonistic upstream market configuration, and increasing returns-to-scale …