Innovation and Supply Chains

David Zilberman, Professor and Robinson Chair, Department of Agricultural and Resource Economics, Berkeley University
Friday, March 8, 2019 - 10:30am to 12:00pm
The next Willard W. Cochrane Lecture in Public Policy will be held:
Date:  Friday, March 8, 2019
Time:  10:30 a.m. - 12:00 p.m., reception immediately following
Location:  105 Cargill Building for Microbial & Plant Genomics
Agriculture has a high rate of innovations (new ways of doing things), largely spawned by an educational-industrial complex. The entrepreneurs that control innovations have to design supply chains to produce and market products and services that implement innovations. We develop a conceptual framework to analyze their behaviors. In particular, the model establishes decision rules that determine the scale of production over time and how much of the feedstocks to produce the final product will be produced by contracting or by vertical integration systems. We argue that implementation of innovations may lead non-competitive behavior in output and input markets, and that the structure may change over time due to entry. Credit, risk, and financial incentives affect the evolution of supply chains and the structure of markets. We illustrate our analysis with examples from flowers in Kenya, the livestock industry, water markets, and beer.