Abstract
The interactions between agricultural price and research policies are formally addressed in this article in order to avoid biased estimates of the benefits to Chile from indigenous and international agricultural research and development. Government pricing policies influenced the innovative behavior of the main Chilean public research institution and reduced the benefits from cost-reducing research benefits relative to those obtained under free trade conditions. Despite the existence of market distortions caused by commodity price policies, Chilean welfare gains from public agricultural research were positive. However, these net economic surplus changes would have been higher if output price interventions would have been aimed at reducing distortions and putting producer prices more in line with international prices.
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