Title

The calculation of returns to research in distorted markets : comment

Document Type

Journal article

Source Publication

Agricultural Economics

Publication Date

1-1-1991

Volume

5

Issue

1

First Page

75

Last Page

82

Publisher

Elsevier

Abstract

In a recent article, Oehmke reported that a high internal rate of return for investment in research when the interaction between research and price policy costs was disregarded could become very low or even negative when the effects of research on the costs of price policy were considered. In this paper, the social returns from research in the presence of the price policies considered by Oehmke are reexamined using a simple geometric approach. The analysis suggests that an output subsidy in a small importing economy, an output subsidy in a closed economy, and a target price in a large exporting economy will — on Oehmke's assumptions — cause only small reductions in the internal rate of return from investment in research. This implies that the apparent underinvestment by governments in agricultural research cannot be explained away by a large upward bias, known to governments, in measured rates of return due to failure to account for interactions between research and the costs of price policy measures.

DOI

10.1016/0169-5150(91)90037-L

Print ISSN

01695150

E-ISSN

15740862

Publisher Statement

Copyright © 1991 Elsevier Science B.V. All rights reserved. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Voon, J. P., & Edwards, G. W. (1991). The calculation of returns to research in distorted markets: Comment. Agricultural Economics, 5(1), 75-82. doi: 10.1016/0169-5150(91)90037-L

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