Distribution of Research Gains in Multistage Production Systems

In a multistage production system, research that reduces production costs at one stage provides benefits to producers at all stages and to consumers. Agricultural production is assumed to involve three stages: nonfarm input, farm, and marketing. Research causes a parallel drop of the supply curve. Benefits are measured as changes in economic surplus. With a competitive model, the distribution of research benefits is the same for research directed at each production stage. Implications for the distribution of research benefits of some forms of imperfect competition are investigated.