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Modelling heterogeneity to estimate the ex ante value of biotechnology innovations

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  • Dillen, Koen
  • Demont, Matty
  • Tollens, Eric

Abstract

After more than a decade of GM crops, literature reports farmers and consumers can gain significantly from the technology, despite the intellectual property rights assigned to the innovator. In this paper we assess the effect of heterogeneity on this distribution of benefits. A two dimensional framework is created to assess the ex ante benefits of an innovation. Given this setting and the scarce data often available, a parametric modelling approach is taken. The two dimensions of heterogeneity, spatial and temporal, are explicitly modelled as they have a different importance for different technologies. Using this framework we can simulate different corporate pricing strategies and evaluate the benefits generated under changing heterogeneity. The framework is tested on the introduction of HT sugar beet in the EU-27.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2008 International Congress, August 26-29, 2008, Ghent, Belgium with number 43945.

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Date of creation: 2008
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Handle: RePEc:ags:eaae08:43945

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Keywords: Heterogeneity; Parametric modelling; ex ante; Research and Development/Tech Change/Emerging Technologies;

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  1. Harvey E. Lapan & GianCarlo Moschini, 2002. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," Center for Agricultural and Rural Development (CARD) Publications 02-wp302, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. Robert Weaver & Justus Wessler, 2004. "Monopolistic pricing power for transgenic crops when technology adopters face irreversible benefits and costs," Applied Economics Letters, Taylor & Francis Journals, vol. 11(15), pages 969-973.
  3. Matty Demont & Marie Cerovska & Wim Daems & Koen Dillen & József Fogarasi & Erik Mathijs & Frantisek Muska & Josef Soukup & Eric Tollens, 2008. ""Ex Ante" Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 463-486, 09.
  4. Matty Demont & Koen Dillen & Erik Mathijs & Eric Tollens, 2007. "GM Crops in Europe: How Much Value and for Whom?," EuroChoices, The Agricultural Economics Society, vol. 6(3), pages 46-53, December.
  5. Binswanger, Hans P, 1981. "Attitudes toward Risk: Theoretical Implications of an Experiment in Rural India," Economic Journal, Royal Economic Society, vol. 91(364), pages 867-90, December.
  6. Moschini, GianCarlo & Lapan, Harvey E. & Sobolevsky, Andrei, 2000. "Roundup Ready Soybeans and Welfare Effects in the Soybean Complex," Staff General Research Papers 1799, Iowa State University, Department of Economics.
  7. Bryan J. Hubbell & Michele C. Marra & Gerald A. Carlson, 2000. "Estimating the Demand for a New Technology: Bt Cotton and Insecticide Policies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(1), pages 118-132.
  8. Lapan, Harvey E. & Moschini, GianCarlo, 2000. "Incomplete Adoption of a Superior Innovation," Staff General Research Papers 1738, Iowa State University, Department of Economics.
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  10. Moschini, GianCarlo & Lapan, Harvey E., 1997. "Intellectual Property Rights and the Welfare Effects of Agricultural R & D," Staff General Research Papers 5048, Iowa State University, Department of Economics.
  11. Terrance M. Hurley & Paul D. Mitchell & Marlin E. Rice, 2004. "Risk and the Value of Bt Corn," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(2), pages 345-358.
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  14. Frisvold, George B. & Sullivan, John & Raneses, Anton, 2003. "Genetic improvements in major US crops: the size and distribution of benefits," Agricultural Economics, Blackwell, vol. 28(2), pages 109-119, March.
  15. Kim, Kwansoo & Chavas, Jean-Paul, 2001. "Technological Change And Risk Management: An Application To The Economics Of Corn Production," 2001 Annual meeting, August 5-8, Chicago, IL 20605, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  16. Harold M. Groves, Chairman, Universities-National Bureau Committee for Economic Research, 1962. "The Rate and Direction of Inventive Activity: Economic and Social Factors," NBER Books, National Bureau of Economic Research, Inc, number univ62-1.
  17. Matin Qaim & Greg Traxler, 2005. "Roundup Ready soybeans in Argentina: farm level and aggregate welfare effects," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 73-86, 01.
  18. Alston, Julian M. & Hyde, Jeffrey & Marra, Michele C. & Mitchell, Paul D., 2003. "An Ex Ante Analysis of the Benefits from the Adoption of Corn Rootworm Resistant, Transgenic Corn Technology," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57828, Australian Agricultural and Resource Economics Society.
  19. Corinne Alexander & Rachael E. Goodhue, 2002. "The pricing of innovations: An application to specialized corn traits," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 333-348.
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