The Competitiveness of Organic Agriculture - an Analysis with the Concept of Path Dependence

Abstract

This paper invokes the concept of path dependence to gain new conceptual insights into the competition between conventional and organic agriculture. We develop a simple model of path dependent agricultural technologies to demonstrate how random events at the beginning of the development path of a technology, combined with increasing returns to adoption, can give rise to an early lock-in of an inferior production system. We conclude that, depending on the circumstances, there may be a place for policy intervention to break the dominance of locked-in agricultural technologies. Any such policy should aim at enhancing network externalities within the organic sector and contribute to the development of the long-term technological potential of organic agriculture.