Investment reluctance: irreversibility or imperfect capital markets?

Short communication: East-West European farm investment behaviour - The role of financial constraints and public support

“…There is a wealth of research on farm investment (e.g., Bierlen & Featherstone, 1998;Benjamin & Phimister, 2002;Petrick, 2004a,b;Latruffe, 2005;Bakucs et al, 2009;Bokusheva et al, 2009;Zynch & Odening, 2009;Latruffe et al, 2010;Hüttel et al, 2010;Bojnec & Latruffe, 2011;Kallas et al, 2012). However, studies dealing with agriculture are generally limited to one country and exclude cross-country comparisons, except for Benjamin & Phimister (2002), who compared France and the United Kingdom.…”

Does timing matter? A real options experiment to farmers' investment and disinvestment behaviours

“…Examples of such inertia have been reported in (dis)adoption studies that focused on a range of agricultural technologies, such as irrigation technology (Carey and Zilberman 2002;Seo et al 2008), conservation intervention (Winter-Nelson and Amegbeto 1998), investment in new perennial crop varieties (Richards and Green 2003) and land conversion (Frey et al 2013). Several reasons have been offered to explain farmers' slow response, including economic and sociological factors, such as financial constraints (Huettel et al 2010), risk aversion (Knight et al 2003) and nonmonetary goals of the decision-maker (Musshoff and Hirschauer 2008). In this context, the real options approach (ROA) -also known as the new investment theory -has been discussed as a possible alternative or an additional explanation for economic inertia (Abel and Eberly 1994;Dixit and Pindyck 1994).…”

Investing Today or Tomorrow? An Experimental Approach to Farmers’ Decision Behaviour

“…Several explanations for this observed behaviour have been offered. Among them are financial constraints (Hu and Schiantarelli, 1998; Huettel et al. , 2010), risk aversion (Knight et al.…”

“…For example, predictions of the ROA usually refer to investment triggers, which are not directly observable. Furthermore, the econometric estimation of real options models is also hampered by heterogeneity because multiple investment options may coexist or financial constraints may affect farms’ investment decisions (Huettel et al. , 2010).…”

“…Several explanations for this observed behaviour have been offered. Among them are financial constraints (Hu and Schiantarelli, 1998;Huettel et al, 2010), risk aversion (Knight et al, 2003;Viscusi et al, 2011) and non-monetary goals of the decision maker (e.g. tradition) (Motheral, 1951;Schwartz, 1994;Amit et al, 2001).…”