STOCHASTIC STRUCTURE, FARM SIZE AND TECHNOLOGY ADOPTION IN DEVELOPING AGRICULTURE

Extract: This paper develops a model that explains land-use allocation and technology adoption taking into account the interfarm variation of land holdings and the role of land holdings (wealth) in determining risk preferences. The model specifically recognizes differential uncertainties in both traditional and modern technological processes and the marginal effects of modern inputs on risk as well as fixed costs attached to adoption. As a by-product, the results also suggest a structural econometric specification that can serve as a basis for empirical examination of the relationship of farm size and adoption