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Abstract

Increased fertilizer use is considered important for agricultural development in low-income countries. Promoting increased use of chemical fertilizer by lowering its price may be ineffective if demand is price inelastic. In theory, the price elasticity of demand depends on the returns to its use, but the evidence is scarce. Furthermore, while returns are often estimated for small changes in chemical fertilizer use, returns to larger changes in its use (intensive margins) are less understood. Through the inter-zonal comparisons in Nepal, we provide indicative evidence that greater returns to chemical fertilizer are associated with greater price elasticities of demand. Moreover, the evidence suggests that returns at the intensive margins, rather than returns to small changes, may largely account for inter-zonal differences in returns to chemical fertilizer within Nepal. The results suggest that better understanding the returns at the intensive margins is critical for effective agricultural inputs policies in developing countries.

Item Type:	Article
Authors/Creators:	Takeshima, H and Adhikari, RP and Shivakoti, S and Kaphle, BD and Kumar, A
Keywords:	returns to chemical fertilizer, intensive margins, generalized Double-Hurdle model, generalized propensity score, inverse probability weighting, Nepal
Journal or Publication Title:	Food Policy
Publisher:	Elsevier Sci Ltd
ISSN:	0306-9192
DOI / ID Number:	10.1016/j.foodpol.2017.03.007
Copyright Information:	Copyright 2017 Elsevier Ltd.
Related URLs:	Google Scholar: Adhikari, RP UTAS Profile: Adhikari, RP
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