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JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact support@jstor.org.ABSTRACT. Agricultural land often yields significant amenity benefits that may not be reflected in the prevailing allocation of land between agricultural and nonagricultural uses. This paper introduces a simple supply-demand model that incorporates these benefits in the determination of optimal land allocation. Threestage least squares and county-level data are used to estimate the supply and demand parameters. These estimates confirm the plausibility of the conceptual model. Results from the contingent valuation literature illustrate the extent of underallocation of land to agriculture due to existing institutional conditions. Some corrective measures and their distributional effects are discussed and quantified. (JEL Q24)

In this paper we integrate technology diffusion within Hotelling's exhaustible resource model. The modern technology is a conservation technology such as drip irrigation used with groundwater. Resource quality heterogeneity and rising water prices are responsible for the gradual adoption of the modern technology, and under reasonable conditions the diffusion curve is an S-shaped function of time. Without intervention, the diffusion process will be slower than is socially optimal, and optimal resource use tax will acceterate the diffusion of the conservation technology and slow down excessive resource depletion caused by market failure due to open access conditions.

No abstract