Market power in smart farming and the distribution of gains in two‐stage crop production system

Abstract

In smart farming, agricultural technology providers (ATPs) wield market power in both the upstream (data collection/aggregation) and downstream (crop production) markets. Using a two‐stage Muth model, this study assesses benefit distribution from ATPs' data‐driven services in smart farming. Results show limited farmer returns from data sharing, questioning policymakers' data value focus. While data‐driven services offer notable benefits, ATPs capture a significant share due to market power. Addressing ATP market power promotes equitable rent distribution, but perfect competition risks ATPs' sustainability and R&D incentives, presenting a policy challenge for smart farming outcomes.