Econometric evaluation of new technology with an application to integrated pest management [profit functions; flexible functional farm]

Extract: In this paper we provide a method for the microeconomic evaluation of a new technology using a panel data approach. With panel data, the choice of whether to adopt is endogenous, and firms (observations) for which it is more profitable to adopt may have self-selected the new technology as opposed to the case of experimental design data where the choice of technology is randomly assigned by the experimenter. We apply our model to the evaluation of integrated pest management. The purposes of this paper are to present an intuitive discussion of joint self-selection and choice-based sampling biases, propose a solution, and apply our solution to evaluate IPM