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The Value of Variable Rate Technology: An Information‐Theoretic Approach
Author(s) -
Bullock David S.,
Ruffo Matías L.,
Bullock Donald G.,
Bollero Germán A.
Publication year - 2009
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/j.1467-8276.2008.01157.x
Subject(s) - profitability index , variable (mathematics) , value (mathematics) , economics , econometrics , ex ante , statistics , mathematics , macroeconomics , finance , mathematical analysis
We present a theoretical treatment of the economics of variable rate technology and its interplay with information. The framework facilitates description of on‐farm empirical profitability studies of variable rate nitrogen application on Illinois cornfields. We estimate site‐specific ex ante economically optimal nitrogen application rates, and the value of site‐specific information in the management of variable rate technology. We find that with site‐specific information provided free, variable rate nitrogen application would have been profitable in six of eight fields. Because private markets are unlikely to provide such information sufficiently, more public funding of long‐term, multiregion, multiyear experimentation is appropriate.