Market Price Effects of Technological Change on Income Distribution in Semisubsistence Agriculture

Abstract

The impact of a technologically induced rightward shift in the supply function of a commodity grown and partly consumed by semisubsistence farmers is examined. In closed-economy, free market situations, the distribution of economic gains between consumers and producers depends on the proportional shift of the supply function, proportion of the commodity marketed, and elasticities of demand and supply for the commodity. Differences in adoption and marketable surplus between large and small farmers result in differential benefits, but over a range of parameter values, small farmers gain as much or more than large farmers when supply shifts faster than demand.

Green Revolution: Impacts, limits, and the path ahead

“…Widespread adoption of GR technologies led to a significant shift in the food supply function, contributing to a fall in real food prices (23,24). Between 1960 and 1990, food supply in developing countries increased 12-13% (25).…”

Technological change and agricultural household income distribution: theory and evidence from China

“…Most analytical models of the distributional impact of a new technology attempt to analyse how the new technology a¡ects the distribution of income among producers in a given region, between producers and consumers, or between landowners and workers (Binswanger 1980;Hayami and Herdt 1977;Quizon and Binswanger 1983). The analytical model presented in this section, however, will analyse the distributional impact by examining changes in a household's production mix.…”

“…Some studies suggested that, although small farmers and tenant farmers might initially lag behind large farmers in the adoption process, they soon caught up, and eventually, a farm's size and a farmer's tenure status became irrelevant with respect to the technology's adoption and income distribution. Some studies argued that the Green Revolution might bene¢t the poor in the long run because of the fall of food prices (Grabowski 1979;Gri¤n 1974;Hayami and Herdt 1977;Lipton and Longhurst 1989;Mellor 1978;Pears 1980;Rao and Hanumanth 1976;Ruttan 1978).…”

Alauddin, Mohammad, and Clement Tisdell. The ‘Green Revolution’ and Economic Development: The Process and its Impact in Bangladesh. New York: St. Martin's Press, 1991, xxiii + 322 pp., $@@‐@@69.95

“…In the part of the book dealing with distributional consequences of the green revolution, Alauddin and Tisdell apply a well-known analytical model developed by Hayami and Herdt (1977) to a comparison of gains from technical progress between different functional groups: consumers and producers, and large and small farms. Their results robustly indicate that consumers have gained relative to producers and that small farmers have benefited relative to large farmers.…”