A test for complementarities among multiple technologies that avoids the curse of dimensionality

Li Yu, Terrance Hurley, James Kliebenstein, Peter Orazem

Research output: Contribution to journalArticlepeer-review

19 Scopus citations

Abstract

We propose a strategy to identify the complementarity or substitutability among technology bundles. Differences between the observed distribution of technology choices can be subjected to statistical tests. Combinations of technologies that occur with greater frequency than would occur under independence are complementary technologies. Combinations that occur with less frequency are substitute technologies. We use the strategy to evaluate multiple technology adoptions on UShog farms. As the number of bundled technologies increases, they are increasingly likely to be complementary with one another, even if subsets are substitutes when viewed in isolation.

Original languageEnglish (US)
Pages (from-to)354-357
Number of pages4
JournalEconomics Letters
Volume116
Issue number3
DOIs
StatePublished - Sep 2012

Bibliographical note

Funding Information:
This paper has benefited from comments from seminar participants at Iowa State University and at meetings of the Midwest Economics Association and the Agricultural & Applied Economics Association. Funding support from the US Department of Agriculture and the National Pork Board/Primedia Business is gratefully acknowledged.

Keywords

  • Complements
  • Hog farms
  • Independence
  • Substitutes
  • Technology bundles

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