Production technology option value: the case of rbST in Michigan |
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Authors: | Nicole J Olynk Christopher A Wolf Glynn T Tonsor |
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Institution: | 1. Department of Agricultural Economics, Purdue University, 403 West State Street, West Lafayette, IN 47907, USA;2. Department of Agricultural, Food, and Resource Economics, Michigan State University, 446 W. Circle Drive, East Lansing, MI 48824, USA;3. Department of Agricultural Economics, Kansas State University, 331‐J Waters Hall, Manhattan, KS 66506, USA |
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Abstract: | Agricultural producers are increasingly required to adjust production practices to satisfy retailer, and ultimately consumer, preferences. This article highlights the option value that underlies decisions related to production technologies using the case of Michigan dairy farmers and recombinant bovine somatotropin (rbST). Welfare impacts were calculated for dairy producers when milk production systems which allowed the use of rbST were eliminated from the producer choice set. Those dairy producers using rbST just before its elimination realized a higher welfare loss than those not using the technology. However, significant welfare impacts were found for all dairy producers indicating that all producers valued the option to use this production technology. |
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Keywords: | Q10 Q12 Q13 Q18 Dairy farm management Producer welfare rbST Technology Willingness to pay |
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