Effects of Partial Competition on Benefits from Technical Change: Evidence from Tomato Industry in Khorasan Province

Studies on benefits from innovations (technical change) have mostly been performed within the framework of competitive markets. These studies indicate that if the market structure under study is not competitive, determination of technical change benefits within a competitive framework may yield distorted or biased results for different groups. Considering the noncompetitive market structure of tomato in Khorasan Province, benefits from applying biological innovation for farmers, processors and the society as a whole were estimated. The results indicate that under noncompetitive conditions in the tomato market in Khorasan Province, and as a result of the processors’ market power in buying tomato, the potential benefits of utilizing hybrid varieties have reduced for both farmers and the society by about 58 and 12.5 percent, respectively. It may naturally be concluded that farmers’ incentives to adopt hybrid varieties are attenuated because of the tomato noncompetitive market.