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.

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The General Accounting Office (GAO) recommended that the USDA substantially reduce or eliminate the extent of price discrimination practiced under federal milk marketing orders. The purpose of this study was to quantify the impacts of alternative means of implementing the GAO proposal on the economic viability of Texas and New Mexico dairy farms. Five dairy farms were simulated for six years under the current dairy policy and five alternative proposals. Results of the analyses indicate that large New Mexico dairies can remain economically viable under all of the alternatives. On the other hand, federal order policy changes would accelerate the loss of equity for moderate size Texas dairy farms.