Gurara, Daniel ZerfuLarson, Donald F.2014-02-042014-02-042013-10https://hdl.handle.net/10986/16895In Africa, farmers have been reluctant to take up new varieties of staple crops developed to boost smallholder yields and rural incomes. Low fertilizer use is often mentioned as a proximate cause, but some believe the problem originates with incomplete input markets. As a remedy, African governments have introduced technology adoption programs with fertilizer subsidies as a core component. Still, the links between market performance and choices about using fertilizer are poorly articulated in empirical studies and policy discussions, making it difficult to judge whether the programs are expected to generate lasting benefits or to simply offset high fertilizer prices. This paper develops a conceptual model to show how choices made by agents supplying input services combine with household livelihood settings to generate heterogeneous decisions about fertilizer use. An applied model is estimated with data from a panel survey in rural Ethiopia. The results suggest that adverse market conditions limit the adoption of fertilizer-based technologies, especially among resource-poor households. Farmers appear to respond to market signals in the aggregate and this provides a pathway for subsidies to stimulate demand. However, the research suggests that lowering transaction costs, through investments in infrastructure and market institutions, can generate deeper effects by expanding the technologies available to farmers across all pricing outcomes.en-USCC BY 3.0 IGOAGRICULTURAL ECONOMICSAGRICULTURAL EXTENSIONAGRICULTURAL GROWTHAGRICULTURAL INNOVATIONSAGRICULTURAL MARKETAGRICULTURAL MARKETSAGRICULTURAL POLICYAGRICULTURAL PRODUCERSAGRICULTURAL PRODUCTIONAGRICULTURAL PRODUCTION SYSTEMSAGRICULTURAL PRODUCTIVITYAGRICULTURAL RESEARCHAGRICULTURAL SYSTEMSAGRICULTURAL TECHNOLOGIESAGRICULTUREALLOCATIVE EFFICIENCYALTERNATIVE POLICIESASSET PRICINGBARLEYCEREAL PRICECHEMICAL FERTILIZERCHEMICAL FERTILIZERSCLIMATECOMMERCIAL AGENTSCOMMERCIALIZATIONCOMPARATIVE ANALYSISCOMPETITIVE MARKETSCOMPETITIVE PRICESCONCEPTUAL FRAMEWORKCREDITCROPCROP CHOICECROPPINGCROPSDECISION MAKINGDELIVERY OF SERVICESDEMANDDEMAND CURVESDEMAND FUNCTIONDEMOGRAPHICSDEVELOPMENT ECONOMICSDEVELOPMENT POLICYDEVELOPMENT STRATEGIESECOLOGICAL CONDITIONSECONOMETRIC MODELINGECONOMIC ACTIVITYECONOMIC DEVELOPMENTECONOMIC GEOGRAPHYECONOMIC GROWTHECONOMICSECONOMIESEFFICIENCYEMPIRICAL STUDIESENVIRONMENTENVIRONMENTALENVIRONMENTSEQUITYEXPECTATIONSEXPENDITUREEXTERNALITIESFAILURESFARMFARM HOUSEHOLDFARM MANAGEMENTFARM SIZEFARMERSFARMINGFARMING ACTIVITIESFARMING HOUSEHOLDSFARMING METHODSFARMING PRACTICESFARMSFERTILIZERFERTILIZER APPLICATIONFERTILIZER APPLICATIONSFERTILIZER CONSUMPTIONFERTILIZER DISTRIBUTIONFERTILIZER EFFICIENCYFERTILIZER MARKETFERTILIZER PRICESFERTILIZER RESEARCHFERTILIZER SUBSIDIESFERTILIZER USEFINANCIAL MARKETSFOOD POLICYFOOD POLICY RESEARCHFOOD PRICESFOOD SECURITYGRAIN MARKETGROWTH THEORYHOUSEHOLD FOODHUMAN CAPITALINCOMPLETE MARKETSINCREASING RETURNSINFLUENCEINORGANIC FERTILIZERSINPUT PRICESINPUT USEINPUTSINVENTORIESINVESTMENTSLABOR MARKETLABOR MARKETSLANDLIQUIDITYMANUREMARGINAL VALUEMARKET ACCESSMARKET CONDITIONSMARKET DEVELOPMENTMARKET FAILUREMARKET REFORMSMARKET RESEARCHMARKET RISKSMARKET STRUCTUREMARKETINGMARKETPLACEMAXIMUM LIKELIHOOD METHODMEASUREMENTMODELSMONOPOLYOPPORTUNITY COSTSOPTIMIZATIONOPTIONSORGANIC CHEMICALOUTCOMESPESTICIDESPHOSPHATEPHOSPHATE FERTILIZERSPOLICY INSTRUMENTSPOLITICAL ECONOMYPRICEPRICE RISKPRICE VOLATILITYPRICESPRICINGPRODUCERSPRODUCTPRODUCTION FUNCTIONPROFIT MAXIMIZATIONPROFITSPROPERTYPROPERTY RIGHTSPUBLIC GOODSRAINFALL VARIABILITYRESOURCE CONSERVATIONRESOURCESRETAILRISK AVERSERISK AVERSIONRISK MANAGEMENTSALESSMALLHOLDER AGRICULTURESOIL SCIENTISTSSPREADSTOCKSTOCKSSTORAGESUBSIDIESSUBSIDYSUBSTITUTESUBSTITUTESSUNK COSTSSUPPLIERSUPPLYSUPPLY CHAINSUPPLY CHAINSSUPPLY CURVESURPLUSTHEORYTRADETRADE POLICYTRANSACTION COSTSTRANSACTIONS COSTSTROPICAL AGRICULTUREUREAVALUEVALUE OF OUTPUTVALUESVARIABLESWEALTHWHEATWHOLESALERSpanel selection modelWorld Bank10.1596/1813-9450-6681