Showing papers in "Research Papers in Economics in 2022"
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TL;DR: The results suggest that the information available to growers about fungicide resistance is essential for its mitigation with the proposed compensation mechanism, and it is preferable that the misinformed grower has the compensating role.
Abstract: Fungicide resistance developed by pathogens that grapes are susceptible to is problematic for the industry today. We provide further insight into the strategic behavior of grape growers when their choices of fungicide levels generate a negative intertemporal production externality in the form of fungicide resistance. We find that when growers encounter this type of externality, the noncooperative fungicide level is higher than the socially optimal level. We examine a compensation mechanism designed to ameliorate fungicide resistance and find that it induces the socially optimal level; however, misinformation about the severity of the fungicide resistance generates distortions. The results suggest that the information available to growers about fungicide resistance is essential for its mitigation with the proposed compensation mechanism. In particular, we find that if the misinformed grower considers fungicide resistance to be relatively mild, then it is preferable that the misinformed grower has the compensating role.