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Trait Stacking, Licensing, and Seed Firm Acquisitions on Genetically Modified Grains: A Strategic Analysis

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Author Info

  • Wilson, William W.
  • Huso, Scott R.

Abstract

Commercialization of genetically modified (GM) traits leads to interesting strategic questions for agbiotechnology and seed firms. The purpose of the study is to evaluate equilibrium strategies of agbiotechnology and seed firms regarding commercialization of GM traits. Two game theory models were developed to examine equilibrium strategies. In the first, both agbiotechnology firms have commercialization strategies of licensing or not. In the second, the agbiotechnology firm also has the strategic option to purchase a seed form as a commercialization strategy. Results indicate that the equilibrium strategy would be for each of the agbiotechnology firms to license their traits, and the seed firm would release a stacked trait. However, order of play matters and impacts the equilibrium. Finally, in the second game, the equilibrium is for the agbiotechnology company to purchase a seed firm. Each of these decisions is highly strategic and reflects the current strategic challenges in the agbiotechnology industry.

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Bibliographic Info

Article provided by Western Agricultural Economics Association in its journal Journal of Agricultural and Resource Economics.

Volume (Year): 33 (2008)
Issue (Month): 3 (December)
Pages:

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Handle: RePEc:ags:jlaare:46560

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Web page: http://waeaonline.org/
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Related research

Keywords: Acquisition; Game theory; Genetically modified; Licensing; Trait commercialization; Trait stacking; Crop Production/Industries; Research and Development/Tech Change/Emerging Technologies;

References

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  1. Lapan, Harvey E. & Moschini, GianCarlo, 2000. "Incomplete Adoption of a Superior Innovation," Staff General Research Papers 1738, Iowa State University, Department of Economics.
  2. Wilson, William W. & Janzen, Edward L. & Dahl, Bruce L. & Wachenheim, Cheryl J., 2003. "Issues In Development And Adoption Of Genetically Modified (Gm) Wheats," Agribusiness & Applied Economics Report 23497, North Dakota State University, Department of Agribusiness and Applied Economics.
  3. Huso, Scott R. & Wilson, William W., 2005. "Strategic Analysis Of Trait Commercialization In Genetically Modified (Gm) Grains: The Case Of Gm Wheat," Agribusiness & Applied Economics Report 23632, North Dakota State University, Department of Agribusiness and Applied Economics.
  4. Matin Qaim & Alain de Janvry, 2003. "Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(4), pages 814-828.
  5. Derek Berwald & Colin A. Carter & Guillaume P. Gru�re, 2006. "Rejecting New Technology: The Case of Genetically Modified Wheat," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(2), pages 432-447.
  6. Lence, Sergio H. & Hayes, Dermot J. & McCunn, Alan & Smith, Stephen & Niebur, William S., 2005. "Welfare Impacts of Intellectual Property Protection in the Seed Industry," Staff General Research Papers 12434, Iowa State University, Department of Economics.
  7. Diana M. Burton & H. Alan Love & Gokhan Ozertan & Curtis R. Taylor, 2005. "Property Rights Protection of Biotechnology Innovations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(4), pages 779-812, December.
  8. S. Baranzoni & P. Bianchi & L. Lambertini, 2000. "Market Structure," Working Papers 368, Dipartimento Scienze Economiche, Universita' di Bologna.
  9. Furtan, William Hartley & Gray, Richard S. & Holzman, J.J., 2005. "Regulatory Approval Decisions in the Presence of Market Externalities: The Case of Genetically Modified Wheat," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 30(01), April.
  10. Lemarie, Stephane & Ramani, Shyama, 2003. "Analysis Of The Vertical Relationships Between Seed And Biotech Companies," 2003 Annual meeting, July 27-30, Montreal, Canada 22041, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  11. Wilson, William W. & Huso, Scott R., 2006. "Producer Surplus Distributions in GM Crops: The Ignored Impacts of Roundup Ready Wheat," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(02), August.
  12. Johnson, D. Demcey & Lin, William & Vocke, Gary, 2005. "Economic and welfare impacts of commercializing a herbicide-tolerant, biotech wheat," Food Policy, Elsevier, vol. 30(2), pages 162-184, April.
  13. Kalaitzandonakes, Nicholas G. & Hayenga, Marvin L., 2000. "Structural Change In The Biotechnology And Seed Industrial Complex: Theory And Evidence," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26026, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  14. Nganje, William E. & Johnson, D. Demcey & Wilson, William W. & Leistritz, F. Larry & Bangsund, Dean A. & Tiapo, Napoleon M., 2001. "Economic Impacts Of Fusarium Head Blight In Wheat And Barley: 1998-2000," Agribusiness & Applied Economics Report 23515, North Dakota State University, Department of Agribusiness and Applied Economics.
  15. Rausser, Gordon C. & Scotchmer, Suzanne & Simon, Leo K., 1999. "Intellectual Property and Market Structure in Agriculture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt70j206tr, Department of Agricultural & Resource Economics, UC Berkeley.
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