Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/183450 
Year of Publication: 
2018
Series/Report no.: 
IFN Working Paper No. 1221
Publisher: 
Research Institute of Industrial Economics (IFN), Stockholm
Abstract: 
Using detailed census data covering over 40,000 farms in Alberta, Saskatchewan and Manitoba, Canada, we document the vast and increasing farm size heterogeneity, and analyze the role of farm size in adapting to the removal of an export subsidy in 1995. We find that larger farms were more likely to switch to new labor-saving tillage technologies in response to the large negative shock to grain prices caused by the reform. Small- and medium-sized farms responded to the reform by adopting the more affordable minimum tillage technology. We develop a simple model of heterogeneous farms and technology adoption that can explain our findings. The results suggest that farm size plays a crucial role in determining farm-level adaptation to agricultural trade reform. Consistent with the Alchian-Allen hypothesis, the increase in per-unit trade costs due to the reform was associated with farms shifting their production of crops from low-value wheat to higher value canola.
Subjects: 
Agricultural Trade Liberalization
Export Subsidy
Technical Change
Farm Size
Firm Heterogeneity
JEL: 
F14
O13
Q16
Q17
Q18
Document Type: 
Working Paper

Files in This Item:
File
Size
937.47 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.