Journal article

Authors list: Huebler, Michael; Schwerhoff, Gregor

Publication year: 2023

Pages: 1369-1404

Journal: Journal of the Association of Environmental and Resource Economists

Volume number: 10

Issue number: 5

ISSN: 2333-5955

eISSN: 2333-5963

DOI Link: https://doi.org/10.1086/724517

Publisher: UNIV CHICAGO PRESS

Abstract: 
This article introduces a new Hopenhayn-Melitz-type model of heterogeneous producers with endogenous technology choice. Different from previous trade models, it describes smallholder producers in rural areas of developing countries in the context of environment and development economics. Shocks (climate change) and various policies affect the producers' endogenous choice between market entry or exit and between simple or advanced technology. This adds new margins of adjustment to models used in this context. Based on these mechanisms, the theoretical analysis identifies a novel type of the rebound effect via market entry. The numerical application to coffee production in rural Vietnam shows that secondary effects of the shocks, such as changes in the number of producers, can be larger than the original impact. Technology-supporting policies can have unintended detrimental side effects on less productive producers.

Harvard Citation style: Huebler, M. and Schwerhoff, G. (2023) Economic Policy and Technology Choice of Heterogeneous Producers, Journal of the Association of Environmental and Resource Economists, 10(5), pp. 1369-1404. https://doi.org/10.1086/724517

APA Citation style: Huebler, M., & Schwerhoff, G. (2023). Economic Policy and Technology Choice of Heterogeneous Producers. Journal of the Association of Environmental and Resource Economists. 10(5), 1369-1404. https://doi.org/10.1086/724517