On the effects of technology improvements in multi-market models: Theory and evidence.

The purpose of this paper is to develop the methodology that allows the inclusion of a technology variable in multi-market welfare models. We compare the price induced welfare effects obtained from a multimarket technology-inclusive model, a multimarket technology-exclusive model and a single-market model. An application to the Greek cotton market shows that the omission of the effects of technology biases the estimated welfare effects. Moreover, welfare estimates from the multi-market approach carry superior statistical properties than estimates obtained from the single-market approach.