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| Title: | Testing for Complementarity and Substitutability among Multiple Technologies: The Case of U.S. Hog Farms |
| Authors: | Yu, Li
Hurley, Terrance M.
Kliebenstein, James B.
Orazem, Peter F. |
| Authors (Email): | Yu, Li (yuli@iastate.edu)
Hurley, Terrance (tmh@umn.edu)
Kliebenstein, James (jklieben@iastate.edu)
Orazem, Peter F. (pfo@iastate.edu) |
| JEL Codes: | O33
L25
C12 |
| Issue Date: | 2008-09-02 |
| Series/Report no.: | ISU Economics Working Paper
08026 |
| Abstract: | We propose a strategy to identify the complementarity or substitutability among
technology bundles. Under the assumption that alternative technologies are independent,
we develop a hypothetical distribution of multiple technology adoptions. Differences
between the observed distribution of technology choices and the hypothetical distribution
can be subjected to statistical tests. Combinations of technologies that occur with greater
frequency than would occur under independence are complementary technologies.
Combinations that occur with less frequency are substitute technologies. This method is
easily applied to simultaneous decisions regarding many technologies. We use the
strategy to evaluate multiple technology adoptions on U.S. hog farms. We find that some
technologies used in pork production are substitutable for one another while others are
complementary. However, as the number of bundled technologies increases, they are
increasingly likely to be complementary with one another, even if subsets are substitutes
when viewed in isolation. This finding suggests that farmers have an incentive to adopt
many technologies at once. Larger farms and farms run by more educated operators are
the most likely to adopt multiple technologies. The complementarity among technologies
in large bundles is contributing to a form of returns to scale that contributes to growth in
average farm size. |
| URI: | http://purl.umn.edu/48530 |
| Institution/Association: | Iowa State University>Department of Economics>Working Papers |
| Total Pages: | 39 |
| Collections: | Working Papers
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| paper_12983_08026.pdf | | 325Kb | PDF | View/Open |
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