A. Purvis et al., TECHNOLOGY ADOPTION DECISIONS UNDER IRREVERSIBILITY AND UNCERTAINTY -AN EX ANTE APPPROACH, American journal of agricultural economics, 77(3), 1995, pp. 541-551
Empirical results demonstrate that uncertainty about costs and require
ments for environmental compliance is an important determinant of dair
y producers' investment behavior. Ex ante forecasting of how uncertain
ty and irreversibility are likely to affect producers' responsiveness
to agricultural technologies has implications for the design of enviro
nmental policies. Simulation modeling methods are described. The empir
ical analysis focuses on Texas producers' propensity to adopt free-sta
ll dairy housing. Free-stall investments offer advantages for both pro
ductivity-augmentation and pollution abatement, yet uncertainty and ir
reversibility are obstacles to adoption. Implications of this ex ante
paradigm for policy design and implementation are discussed.