In this paper we consider the market-level impacts of factor-augmenting innovations designed to reduce the use of fertilizers and pesticides, first within the context of a simple two-factor model, and then through a simulation model of the U.S. corn market. In both models, the impacts depend on the output demand elasticity and input substitution elasticities. The principal conclusion of the simulation analysis is that the potential for new techniques to reduce the use of agricultural chemicals is limited. Capital-augmenting innovations would actually raise fertilizer and pesticide usage. Land-augmenting innovations would also tend to increase pesticide usage.
All Science Journal Classification (ASJC) codes
- Agricultural and Biological Sciences (miscellaneous)
- Economics and Econometrics