The implications of crop minimum support price in the presence of myopic and strategic farmers

Chintapalli, Prashant; Tang, Christopher S.

doi:10.1016/j.ejor.2021.09.034

Cited by 15 publications

(9 citation statements)

References 18 publications

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“…The options for farmers are to sell their produce to traders, processors, or retailers (what we call the agricultural product distributor) (Hsu et al, 2019). After receiving the demand for the product from the produce distributor, the farmer completes the finished product and receives a certain wholesale price (w) Yi et al, 2021), and delivers it to the product distributor (Chintapalli & Tang, 2022b). They sell products (possibly after processing) to urban consumers at the price of p. In addition, the agricultural product distributor may require specific standards or minimum quantities of agricultural products, which may prompt farmers to adopt more advanced or different agricultural technologies (green technology), whether it is to increase productivity, obtain higher quality, or meet other types of standards.…”

Section: Modelmentioning

confidence: 99%

w

) (Chen & Chen, 2021; Yi et al, 2021), and delivers it to the product distributor (Chintapalli & Tang, 2022b). They sell products (possibly after processing) to urban consumers at the price of

p

.…”

Section: Modelmentioning

confidence: 99%

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Farmers' green technology adoption: Implications from government subsidies and information sharing

Hong,

Chen,

Gong

et al. 2023

Naval Research Logistics

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While the previous literature on green technology adoption has not fully considered information sharing, we consider the impact of demand information sharing on the adoption of green technologies by risk‐averse farmers in a vertical agricultural supply chain. We find that government subsidies and information sharing do not always promote farmers' adoption of green technologies. The accuracy of the information plays a vital role in promoting farmers' adoption of green technologies; however, the increased green technology adoption induced by more accurate information may be detrimental to farmer welfare in the presence of production diseconomies. Information sharing can reduce the amount of government subsidies for promoting green technology adoption, thereby suggesting the substitutable role of information and monetary instruments. Nonetheless, information‐sharing may lead to lower water savings and thus should be adopted with caution. Risk aversion has a nontrivial impact on agricultural technology adoption: farmers are more likely to adopt traditional agricultural technologies when their risk aversion is either very low or very high. Finally, we validate our decision model with U.S. Department of Agriculture cotton production data and propose management insights to help farmers make appropriate adoption decisions under information asymmetry and risk‐averse attitudes.

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Section: Modelmentioning

confidence: 99%

w

) (Chen & Chen, 2021; Yi et al, 2021), and delivers it to the product distributor (Chintapalli & Tang, 2022b). They sell products (possibly after processing) to urban consumers at the price of

p

.…”

Section: Modelmentioning

confidence: 99%

Farmers' green technology adoption: Implications from government subsidies and information sharing

Hong,

Chen,

Gong

et al. 2023

Naval Research Logistics

View full text Add to dashboard Cite

show abstract

“…The sale price of a crop in the end‐crop market is linearly determined by the total output, that is,

p=A-bQ

, where A is the market potential and b is price elasticity. Following Chintapalli and Tang (2022) and Hu et al. (2019), we also assume that the market potential uncertainty is negligible.…”

Section: Problem Description and The Modelmentioning

confidence: 99%

“…7 When farmers use TRMs, the crop output per plant capacity is denoted by z . For brevity and following Chintapalli and Tang (2022), we assume that the demand uncertainty and crop yield uncertainty are negligible, and, further, z can be simplified to 1. As mentioned by Guda et al.…”

Section: Problem Description and The Modelmentioning

confidence: 99%

Government subsidy policy for green and efficient raw materials considering farmer heterogeneity

Guo

Cheng

2022

Production and Operations Management

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To protect soil quality for sustainable development and raise farmers' incomes, agricultural firms are increasingly developing green and efficient raw materials (GRMs) that can improve crop yields and reduce soil damage compared to TRMs. However, farmers have heterogeneity in both the trust in agricultural information and sustainable development attitudes, leading to underestimation of the value of GRMs. This paper explores the optimal subsidy policy of the government to promote GRMs considering the effect of farmer heterogeneity using a government‐firm‐farmer Stackelberg game. Our analysis reveals that the government should subsidize both farmers and the GRM firm when the GRMs' effectiveness is not high enough; otherwise, it is more effective to subsidize farmers but not the GRM firm. Such a government subsidy policy can bring a win–win–win outcome for farmers, the GRM firm, and social welfare under certain conditions. Although higher farmers' trust in agricultural information or sustainable development attitudes can increase their subjective willingness to adopt GRMs, counterintuitively, the total farmer surplus will decrease because in this situation: (1) the government will reduce the subsidy to farmers or (2) the GRM firm will increase the GRM price. In addition, compared with considering two‐dimensional heterogeneity of farmers, considering only one‐dimensional heterogeneity or no heterogeneity of farmers will cause the government subsidy to deviate from the goal of promoting GRMs, resulting in a 59.3% reduction in GRM market demand, a 17.3% decrease in the profit of GRM firm, and possibly even making the GRM firm “die out.”

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“…First, some researchers point out that fluctuation in agricultural prices can directly affect agricultural output and further destabilize agricultural markets. Some empirical analysis has proved that the change in agricultural product price fluctuates agriculture yield [14][15], through the economic chain of which, the change will impact economic stabilization and perfect futures eventually [16].…”

Section: Theoretical Perspective Of Agricultural Factorsmentioning

confidence: 99%

Kazakhstan’s Agricultural Economy after the Accession to WTO: Economic Transformation and Realistic Dilemma

Cui,

2022

EHSS

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As a country in modernization transition, Kazakhstan's economy has experienced a struggling process of integrating into the globalization for its accession to the WTO behind the dazzling prosperity, especially its vulnerable yet vital primary industry. Previous research stressed the agricultural economic management issues in Kazakhstan, emphasizing the static one-dimensional agricultural policy research. Compiling data analysis from the databases of the Republic of Kazakhstan Bureau of National Statistics, World Trade Organization, and World Bank, we aim to illustrate, from the theoretical perspective of new institutional economics, that while informal institutions standing still, the market economy reform, which is the transplant of the formal institution, has the endogenous dynamic effects on Kazakhstan's domestic economic sectors, especially its underdeveloped agriculture. Kazakhstan’s commitments to market access, domestic support, import subsidies, and technical barriers, are detrimental to the development of Kazakhstan's agriculture, followed by the influx of homogeneous goods, increased costs of agriculture, potential technological barriers, and even a dysfunctional industrial structure. With insufficient primary conditions, Kazakhstan's market-oriented economic reforms fluctuate the foundation of the industry, laying a hidden danger for the further modernization transformation. Actually, this dilemma of institutional transition is not a particular case in Kazakhstan, but a feature common to most developing countries undergoing modernization.

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The implications of crop minimum support price in the presence of myopic and strategic farmers

Cited by 15 publications

References 18 publications

Farmers' green technology adoption: Implications from government subsidies and information sharing

Farmers' green technology adoption: Implications from government subsidies and information sharing

Government subsidy policy for green and efficient raw materials considering farmer heterogeneity

Kazakhstan’s Agricultural Economy after the Accession to WTO: Economic Transformation and Realistic Dilemma

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