Mechanism Design for Agricultural Machinery Sharing

Abstract

The decline in agriculture, owing to the reduced number of farms, has been countered by adopting advanced technologies aimed at increasing production scale. However, in Japan, despite using such advanced technologies, the unique topographical features render scaling up difficult. Effective collaboration between farmers is required for high productivity in small and medium-sized farms. Although large companies provide top-down services for agricultural machinery sharing (AMS), several small-scale but scattered niche demands remain, some of which are solved via a bottom-up sharing practice based on trust between participating farmers. As the dependence on precarious trust renders the spreading of such a practice challenging, this study proposes an AMS mechanism for replacing trust with monetary incentives. Moreover, the impact of weather uncertainty on the machine use schedule is considered. The mechanism utilizes certain rules to cause the schedule to respond to uncertain weather in the ex-ante stage. Three rules, namely order, release date, and period rules, are proposed, and their characteristics are analyzed through computational experiments. The results reveal that the order rule depends on the participating farmers. The release date rule facilitates farmers in using the machine more frequently, and the period rule tends to equalize farmers’ revenue; however, both rules provide similar results.