Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada

29 Pages Posted: 4 Jun 2013 Last revised: 17 Jul 2014

See all articles by Shon M. Ferguson

Shon M. Ferguson

Swedish University of Agricultural Sciences (SLU) - Department of Economics; Research Institute of Industrial Economics (IFN)

M. Rose Olfert

University of Saskatchewan - College of Agriculture - Agricultural Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 1, 2013

Abstract

We measure the impact of the removal of a railway transportation subsidy on the adoption of technology for Western Canadian farms, using a unique combination of Census and freight rate data. We exploit the large regional variation in these one-time freight rate increases in order to identify causal effects of increased competitive pressure. Using a difference-in-differences methodology we find that higher freights rates – and hence lower farm gate prices – induced farmers to adopt new, more efficient production technology. We also find that farmers experiencing the greatest transportation cost increases also increased fertilizer usage and made significant land use changes.

Keywords: Agricultural Trade Liberalization, Export Subsidy, Technical Change

JEL Classification: F14, O13, Q16, Q17, Q18

Suggested Citation

Ferguson, Shon M. and Olfert, M. Rose, Competitive Pressure and Technology Adoption: Evidence from a Policy Reform in Western Canada (April 1, 2013). IFN Working Paper No. 966, Available at SSRN: https://ssrn.com/abstract=2273426 or http://dx.doi.org/10.2139/ssrn.2273426

Shon M. Ferguson (Contact Author)

Swedish University of Agricultural Sciences (SLU) - Department of Economics

Box 7013
Ulls hus, Ulls väg 27
Uppsala, 750 07
Sweden

Research Institute of Industrial Economics (IFN) ( email )

Box 55665
Grevgatan 34, 2nd floor
Stockholm, SE-102 15
Sweden

M. Rose Olfert

University of Saskatchewan - College of Agriculture - Agricultural Economics ( email )

51 Campus Drive
Saskatoon, SK S7N 5A8
Canada

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