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A Test for Complementarities Among Multiple Technologies that Avoids the Curse of Dimensionality

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  • Yu, Li
  • Hurley, Terrance M.
  • Kliebenstein, James
  • Orazem, Peter
Abstract
We propose a strategy to identify the complementarity or substitutability among technology bundles. Under the assumption that alternative technologies are independent, we develop a hypothetical distribution of multiple technology adoptions. Differences between the observed distribution of technology choices and the hypothetical distribution can be subjected to statistical tests. Combinations of technologies that occur with greater frequency than would occur under independence are complementary technologies. Combinations that occur with less frequency are substitute technologies. This method is easily applied to simultaneous decisions regarding many technologies. We use the strategy to evaluate multiple technology adoptions on U.S. hog farms. We find that some technologies used in pork production are substitutable for one another while others are complementary. However, as the number of bundled technologies increases, they are increasingly likely to be complementary with one another, even if subsets are substitutes when viewed in isolation. This finding suggests that farmers have an incentive to adopt many technologies at once. Larger farms and farms run by more educated operators are the most likely to adopt multiple technologies. The complementarity among technologies in large bundles is contributing to a form of returns to scale that contributes to growth in average farm size.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Yu, Li & Hurley, Terrance M. & Kliebenstein, James & Orazem, Peter, 2012. "A Test for Complementarities Among Multiple Technologies that Avoids the Curse of Dimensionality," Staff General Research Papers Archive 35974, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:35974
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    References listed on IDEAS

    as
    1. McBride, William D. & Key, Nigel D., 2003. "Economic And Structural Relationships In U.S. Hog Production," Agricultural Economic Reports 33971, United States Department of Agriculture, Economic Research Service.
    2. Martin Carree & Boris Lokshin & René Belderbos, 2011. "A note on testing for complementarity and substitutability in the case of multiple practices," Journal of Productivity Analysis, Springer, vol. 35(3), pages 263-269, June.
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    6. Jeffrey H. Dorfman, 1996. "Modeling Multiple Adoption Decisions in a Joint Framework," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 78(3), pages 547-557.
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    Cited by:

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    2. Gebremariam, Gebrelibanos & Tesfaye, Wondimagegn, 2018. "The heterogeneous effect of shocks on agricultural innovations adoption: Microeconometric evidence from rural Ethiopia," Food Policy, Elsevier, vol. 74(C), pages 154-161.
    3. Rivaldo A. B. Kpadonou & Bruno Barbier & Tom Owiyo & Fatima Denton & Franck Rutabingwa, 2019. "Manure and adoption of modern seeds in cereal‐based systems in West African drylands: linkages and (non)complementarities," Natural Resources Forum, Blackwell Publishing, vol. 43(1), pages 41-55, February.
    4. An, Henry, 2012. "Complementarities in Production Technologies: An Empirical Analysis of the Dairy Industry," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124653, Agricultural and Applied Economics Association.
    5. D. Thorleuchter & D. Van Den Poel, 2013. "Semantic Compared Cross Impact Analysis," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/862, Ghent University, Faculty of Economics and Business Administration.
    6. Hennessy, David A. & Zhang, Jing & Bai, Na, 2019. "Animal health inputs, endogenous risk, general infrastructure, technology adoption and industrialized animal agriculture," Food Policy, Elsevier, vol. 83(C), pages 355-362.
    7. Ndiritu, S. Wagura & Kassie, Menale & Shiferaw, Bekele, 2014. "Are there systematic gender differences in the adoption of sustainable agricultural intensification practices? Evidence from Kenya," Food Policy, Elsevier, vol. 49(P1), pages 117-127.
    8. Yang, Qi & Zhu, Yueji & Liu, Ling & Wang, Fang, 2021. "Land tenure stability and adoption intensity of sustainable agricultural practices: Evidence from banana farmers in China," 2021 Conference, August 17-31, 2021, Virtual 315254, International Association of Agricultural Economists.
    9. D. Thorleuchter & D. Van Den Poel, 2012. "Protecting Research and Technology from Espionage," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/824, Ghent University, Faculty of Economics and Business Administration.
    10. D. Thorleuchter & D. Van Den Poel, 2013. "Quantitative Cross Impact Analysis with Latent Semantic Indexing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/861, Ghent University, Faculty of Economics and Business Administration.
    11. Tolulope E. Oladimeji & Oyakhilomen Oyinbo & Abubakar A. Hassan & Oseni Yusuf, 2020. "Understanding the Interdependence and Temporal Dynamics of Smallholders’ Adoption of Soil Conservation Practices: Evidence from Nigeria," Sustainability, MDPI, vol. 12(7), pages 1-21, March.
    12. D. Thorleuchter & D. Van Den Poel, 2012. "Technology Classification with Latent Semantic Indexing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 12/814, Ghent University, Faculty of Economics and Business Administration.
    13. Kassie, Menale & Jaleta, Moti & Shiferaw, Bekele & Mmbando, Frank & Muricho, Geoffrey, 2012. "Plot and Household-Level Determinants of Sustainable Agricultural Practices in Rural Tanzania," RFF Working Paper Series dp-12-02-efd, Resources for the Future.
    14. Jeetendra Prakash Aryal & Dil Bahadur Rahut & Sofina Maharjan & Olaf Erenstein, 2018. "Factors affecting the adoption of multiple climate‐smart agricultural practices in the Indo‐Gangetic Plains of India," Natural Resources Forum, Blackwell Publishing, vol. 42(3), pages 141-158, August.
    15. Glawe, Linda & Wagner, Helmut, 2022. "Is schooling the same as learning? – The impact of the learning-adjusted years of schooling on growth in a dynamic panel data framework," World Development, Elsevier, vol. 151(C).
    16. Goundan, Anatole & Sall, Moussa & Henning, Christian H. C. A., 2020. "Modeling interrelated inputs adoption in rainfed agriculture in Senegal," Working Papers of Agricultural Policy WP2020-05, University of Kiel, Department of Agricultural Economics, Chair of Agricultural Policy.
    17. Menale Kassie & Jesper Stage & Hailemariam Teklewold & Olaf Erenstein, 2015. "Gendered food security in rural Malawi: why is women’s food security status lower?," Food Security: The Science, Sociology and Economics of Food Production and Access to Food, Springer;The International Society for Plant Pathology, vol. 7(6), pages 1299-1320, December.

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    More about this item

    Keywords

    Complementarities; Dimensionality;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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