No abstract

A model of divisible technology adoption under incomplete information dissemination and output uncertainty is developed. We identify economic and subjective factors affecting technology adoption and its intensity. Empirical estimation employs a mixed dichotomous‐continuous framework with nonrandom sample selection. Producers' adoption intensity is conditional on their knowing about and deciding to adopt the new technology. Using survey data on bST (bovine somatotropin) adoption among Texas dairy producers, we find that larger and more educated operators are likely to adopt more intensively. Traditional dichotomous adoption models without sample selection significantly overestimate the adoption rate.

Applied studies of the firm in a risky environment have concentrated either on the firm's technology or on its risk preferences. These models result in generally inconsistent and inefficient parameter estimates. A primal model is proposed which allows a firm's preferences and technology to be estimated jointly in the presence of risk. The model is applied to Iowa corn production and estimated technology parameters are compared with those from other approaches. Modest risk aversion leads to inelastic (even backbending) per‐acre supplies and input demands. Yield heteroskedasticity in inputs leads to supply heteroskedasticity in prices, especially for risk‐neutral firms.

Structural models used to measure market power, though widely employed, continue to be criticized. We compare alternative market power tests, including nonparametric and Solow residual-based (SRB) tests. We develop SRB methods that permit nested testing for both monopolistic and monopsonistic market power by the same firm. These tests and a set of nonparametric tests are implemented to examine market power exertion by U.S. cigarette manufacturers from 1977 to 1993. All tests indicate that cigarette manufacturers exerted monopsonistic power in the upstream tobacco market. They are mixed on whether monopolistic power exertion was exerted in the downstream market. Copyright 2007, Oxford University Press.