AGE 85925345; Paper presented at the "Annual Meeting at the American Agricultural Economics Association," 1984 August 5 - 8; Ithaca, NY, This paper analyzes the use of an exhaustible resource by an agricultural industry, taking into account agricultural policy considerations and some of the unique conventional wisdom features of the agricultural sector. The model is especially appropriate for analyzing the utilization of water resources. The model assumes the agricultural industry to be competitive, to have a wide distribution of farm sizes, to go through a process of adoption of a continuously improving technology, and to face inelastic demand. The new technology considered is a land quality-improving technology which is similar in its properties to modern irrigation technologies (drip, sprinkler, and center pivot irrigation). In particular, it considers a price-support policy and its impacts.
