The impact of public and private R&D on farmers' production decisions: econometric evidence for Midwestern states, 1960-2004

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2010-04-24
Authors
Fan, Xing
Schuring, Jessica
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Economics

The Department of Economic Science was founded in 1898 to teach economic theory as a truth of industrial life, and was very much concerned with applying economics to business and industry, particularly agriculture. Between 1910 and 1967 it showed the growing influence of other social studies, such as sociology, history, and political science. Today it encompasses the majors of Agricultural Business (preparing for agricultural finance and management), Business Economics, and Economics (for advanced studies in business or economics or for careers in financing, management, insurance, etc).

History
The Department of Economic Science was founded in 1898 under the Division of Industrial Science (later College of Liberal Arts and Sciences); it became co-directed by the Division of Agriculture in 1919. In 1910 it became the Department of Economics and Political Science. In 1913 it became the Department of Applied Economics and Social Science; in 1924 it became the Department of Economics, History, and Sociology; in 1931 it became the Department of Economics and Sociology. In 1967 it became the Department of Economics, and in 2007 it became co-directed by the Colleges of Agriculture and Life Sciences, Liberal Arts and Sciences, and Business.

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1898–present

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  • Department of Economic Science (1898–1910)
  • Department of Economics and Political Science (1910-1913)
  • Department of Applied Economics and Social Science (1913–1924)
  • Department of Economics, History and Sociology (1924–1931)
  • Department of Economics and Sociology (1931–1967)

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Abstract

The objective of this paper is to identify the impact of public and private agricultural research on multi-output multi-input profit maximizing decisions of Midwestern farmers. The main hypothesis is that investments in public and private R&D shift outward the supply curves for crop The objective of this paper is to identify the impact of public and private agricultural research on multi-output multi-input profit maximizing decisions of Midwestern farmers. The main hypothesis is that investments in public and private R&D shift outward the supply curves for crop and livestock outputs and, in some cases, reduce the demand for inputs. The study uses state aggregate data for eight Midwestern states over 1960-2004. The own-price elasticities of demand for all inputs are shown to be negative, being larger for agricultural chemicals and energy that for farm capital services, labor and other materials. Additional public agricultural research increases the supply of crop and livestock outputs but biases revenue shares toward crop output. Additional private R&D as in adoption of GM corn varieties shifts outward the supply curves for crops and livestock outputs but biases revenue shares towards crop output. In contrast, an increase in the adoption of GM soybean varieties increases livestock output and deceases crop output. Public agricultural research reduces the demand for capital services and energy and increases the demand for agricultural chemicals, other materials, and labor. An increase in the availability of GM soybean varieties increases the demand for capital services, agricultural chemicals and other materials and has weak negative effects on the demand for labor and energy. GM corn variety adoption reduces the demand for energy but other effects are quite small.and livestock outputs and, in some cases, reduce the demand for inputs. The study uses state;aggregate data for eight Midwestern states over 1960-2004. The own-price elasticities of demand for;all inputs are shown to be negative, being larger for agricultural chemicals and energy that for farm;capital services, labor and other materials. Additional public agricultural research increases the;supply of crop and livestock outputs but biases revenue shares toward crop output. Additional;private R&D as in adoption of GM corn varieties shifts outward the supply curves for crops and;livestock outputs but biases revenue shares towards crop output. In contrast, an increase in the;adoption of GM soybean varieties increases livestock output and deceases crop output. Public;agricultural research reduces the demand for capital services and energy and increases the demand;for agricultural chemicals, other materials, and labor. An increase in the availability of GM soybean;varieties increases the demand for capital services, agricultural chemicals and other materials and;has weak negative effects on the demand for labor and energy. GM corn variety adoption reduces;the demand for energy but other effects are quite small.

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