The Disadoption of rbST and Its Economic Impact: A Switching Regression Approach

This paper focuses on the disadoption of rbST and addresses two key questions related to rbST use and its effects on dairy profitability. First, what are the determinants of the disadoption decision, and do they differ from those of the adoption decision? Second, do the earnings of disadopters differ from those of current adopters? Using a nationally representative dataset of U.S. dairies from 2010, a bivariate probit model with partial observability and an endogenous switching model is estimated. Consistent with other studies, the results show that rbST use does not have a statistically significant effect on dairy profitability. However, within the group of producers who have adopted rbST, I present some empirical evidence that disadopters are doing worse off than those who are still using rbST. Copyright 2013, Oxford University Press.