from Technological Advance When Input Quality Varies

Empirical evidence about new corn production technology in Illinois supports the hypothesis that yield- and output-enhancing effects vary depending on whether technology is input (here, land) quality-dependent or independent. In turn, these differences affect the distribution of economic surplus from technology adoption across geographic regions with varying land quality. A competitive, market-clearing model for a traded commodity is used to estimate the gains in economic surplus from technological advance. Estimation of the benefits of technological advance has generated an extensive body of research. When the aggregate supply curve shifts outward because of a new innovation, the effects on producers and consumers are reflected in changes in economic surplus (Norton and Davis). Besides these aggregate gains, their distribution among various groups also is important. An example is the distribution of gains between early and late adopters of a new technology (Griliches). Less attention has been paid to the variation in output and welfare effects of new technology which may result from differences in the quality of inputs (e.g., land) used in production. Given the sitespecific nature of agricultural technology and the variation in local ecologies, differences in the quality of inputs may strongly affect the use of and potential benefits from new technologies (Peterson and Hayami). This article examines the distribution of regional gains to producers from technological advance when output enhancement varies with input quality. To demonstrate that the disparity in gains can be significant, we evaluate the historical experience of Illinois corn producers with two technologies that vary in their dependence on land quality for yieldenhancing effects. Then, the economic welfare gains from use of each technology are compared across geographical areas of different land quality. The first part of the article considers how input quality affects output. Then, historic changes in corn yields across Illinois crop reporting districts (CRDs) are examined to illustrate the regional yield impacts of technology due to variation in land quality. Finally, the welfare gains across CRDs of new technologies are estimated using a market model developed by Edwards and Freebairn.