Product Concentration and Usage: Behavioral Effects in the Glyphosate Market

dc.contributor.author Perry, Edward
dc.contributor.author Hennessy, David
dc.contributor.author Moschini, Giancarlo
dc.contributor.author Moschini, Giancarlo
dc.contributor.department Center for Agricultural and Rural Development
dc.date 2019-01-17T16:17:09.000
dc.date.accessioned 2020-06-30T01:06:03Z
dc.date.available 2020-06-30T01:06:03Z
dc.date.embargo 2019-01-08
dc.date.issued 2019-01-01
dc.description.abstract <p>People often ignore or misunderstand information that would help them make better decisions. For products that differ by concentration level, a critical choice concerns the correct dosage rate. We study the effects of changing glyphosate product concentration levels on farmers’ glyphosate usage behavior. Glyphosate is the world’s most widely used herbicide. After glyphosate went off patent in 2000, product variants with higher concentration levels entered the market. Using detailed farmlevel glyphosate use data in U.S. corn and soybeans over the period 1998-2011, we estimate the impact of product concentration levels on glyphosate application rates. We control for prices and other sources of heterogeneity by means of individual and time fixed effects. Our findings indicate that increasing the baseline concentration level by 10 percent increases the application rate by nearly 6 percent, despite the fact that labels on more concentrated products provide instructions on how to correctly adjust dosage rates downwards. We attribute part of the concentration effect to rational behavior and part of it to label confusion and/or habit, with smaller farms and early adopters being more likely to resort to habit. A counterfactual simulation predicts that label confusion and/or habit was responsible for a 4.6% increase in total glyphosate use and an additional $59 million per year (4.7%) in glyphosate sellers’ revenues.</p>
dc.identifier archive/lib.dr.iastate.edu/card_workingpapers/597/
dc.identifier.articleid 1596
dc.identifier.contextkey 13583824
dc.identifier.s3bucket isulib-bepress-aws-west
dc.identifier.submissionpath card_workingpapers/597
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/12961
dc.source.bitstream archive/lib.dr.iastate.edu/card_workingpapers/597/2019_Moschini_ProductConcentrationWP.pdf|||Sat Jan 15 01:04:28 UTC 2022
dc.subject.disciplines Agricultural and Resource Economics
dc.subject.disciplines Agriculture
dc.subject.disciplines Behavioral Economics
dc.subject.keywords Behavioral effects
dc.subject.keywords Glyphosate
dc.subject.keywords Heuristics
dc.subject.keywords Label complexity
dc.subject.keywords Product formulation
dc.title Product Concentration and Usage: Behavioral Effects in the Glyphosate Market
dc.type article
dc.type.genre article
dspace.entity.type Publication
relation.isAuthorOfPublication 875efd32-d51f-480d-8d4b-3d87da3f2678
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
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