Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan

14 Pages Posted: 24 Mar 2020

See all articles by Shu‐Yu Huang

Shu‐Yu Huang

affiliation not provided to SSRN

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics

Date Written: August 1996

Abstract

In this paper we develop and apply a general imperfect competition model to evaluate returns to a cost‐reducing innovation. Most related work has applied models of perfect competition. Results demonstrate that welfare estimates derived from a model of perfect competition may be seriously distorted when the relevant market is imperfectly competitive. Application to mechanical harvesting of processing tomatoes in Taiwan reveals the potential for significant benefits to adoption of mechanical harvesting in Taiwan. However, farmers' incentives to adopt the harvester are attenuated because total benefits are reduced by oligopsony power in tomato procurement, and imperfectly competitive processors will capture a large share of the benefits that remain.

Keywords: imperfect competition, oligopsony, processing tomatoes, Taiwan, tomato harvester, welfare analysis, L130, O310, Q120, Q160

Suggested Citation

Huang, Shu‐Yu and Sexton, Richard J., Measuring Returns to an Innovation in an Imperfectly Competitive Market: Application to Mechanical Harvesting of Processing Tomatoes in Taiwan (August 1996). American Journal of Agricultural Economics, Vol. 78, Issue 3, pp. 558-571, 1996, Available at SSRN: https://ssrn.com/abstract=3558981 or http://dx.doi.org/10.2307/1243274

Shu‐Yu Huang (Contact Author)

affiliation not provided to SSRN

No Address Available

Richard J. Sexton

University of California, Davis - Department of Agricultural and Resource Economics ( email )

One Shields Avenue
327 Voorhies
Davis, CA 95616
United States
530-752-2219 (Phone)

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