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An Analysis of the Pricing of Traits in the U.S. Corn Seed Market

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  • Shi, Guanming

    (University of Wisconsin)

  • Chavas, Jean-Paul

    (University of Wisconsin)

  • Steigert, Kyle

    (University of Wisconsin)

Abstract

This paper investigates the pricing of patented traits in the U.S. hybrid corn seed market under imperfect competition. In a multiproduct context, we first examine how substitution/complementarity relationships among products can affect pricing. This is used to motivate multi-product generalizations of the Herfindahl-Hirschman index (GHHI) capturing cross-market effects of imperfect competition on bundle pricing. The GHHI model is applied to pricing of conventional and patented biotech seeds in the US from 2000-2007. One major finding is that standard component pricing in biotech traits is soundly rejected in favor of subadditive bundle pricing. The econometric estimates show how changes in market structures (as measured by both own- and cross-Herfindahl indexes) affect U.S. corn seed prices.

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Bibliographic Info

Paper provided by University of Wisconsin, Agricultural and Applied Economics in its series Staff Paper Series with number 544.

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Date of creation: Dec 2009
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Handle: RePEc:ecl:wisagr:544

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Cited by:
  1. Zhang, Wenhui & Shi, Guanming, 2012. "An Exploration of Product Choices in U.S. Biotech Corn Seed Market," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124758, Agricultural and Applied Economics Association.
  2. Shakya, Sumadhur & Wilson, William W. & Dahl, Bruce, 2013. "Valuing New Random Genetically Modified (GM) Traits in Corn," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 38(1), April.
  3. Ma, Xingliang & Shi, Guanming, 2013. "GM vs. Non-GM: A Survival Analysis of U.S. Hybrid Seed Corn," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 42(3), December.
  4. Nolan, Elizabeth & Santos, Paulo & Shi, Guanming, 2012. "Market concentration and productivity in the United States corn sector: 2002-2009," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 125941, Agricultural and Applied Economics Association.
  5. Shakya, Sumadhur & Wilson, William W. & Dahl, Bruce L., 2012. "Valuing New Random GM Traits: The Case of Drought Tolerant Wheat," Agribusiness & Applied Economics Report 128033, North Dakota State University, Department of Agribusiness and Applied Economics.
  6. Fernandez-Cornejo, Jorge & Livingston, Michael & Mitchell, Lorraine & Wechsler, Seth, 2014. "Genetically Engineered Crops in the United States," Economic Research Report 164263, United States Department of Agriculture, Economic Research Service.

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