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Genetically Modified Crop Innovations and Product Differentiation: Trade and Welfare Effects in the Soybean Complex

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  • Sobolevsky, Andrei
  • Moschini, Giancarlo
  • Lapan, Harvey

Abstract

A partial equilibrium four-region world trade model for the soybean complex is developed in which Roundup Ready (RR) products are weakly inferior substitutes to conventional ones, RR seeds are priced at a premium, and costly segregation is necessary to separate conventional and biotech products. Solution of the calibrated model illustrates how incomplete adoption of RR technology arises in equilibrium. The United States, Argentina, Brazil, and the Rest of the World (ROW) all gain from the introduction of RR soybeans, although some groups may lose. The impacts of RR production or import bans by the ROW or Brazil are analyzed. U.S. price support helps U.S. farmers, despite hurting the United States and has the potential to improve world efficiency.

Suggested Citation

  • Sobolevsky, Andrei & Moschini, Giancarlo & Lapan, Harvey, 2005. "Genetically Modified Crop Innovations and Product Differentiation: Trade and Welfare Effects in the Soybean Complex," ISU General Staff Papers 200501010800001339, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:200501010800001339
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    1. Antonio Seccia & Antonio Stasi & Luigi Roselli, 2006. "Atteggiamento dei consumatori nei confronti dell'evoluzione del sistema agro-alimentare: l'introduzione di alimenti geneticamente modificati," Economia agro-alimentare, FrancoAngeli Editore, vol. 10(1).
    2. Kaye-Blake, William & Saunders, Caroline M., 2006. "Estimated Contribution of Four Biotechnologies to New Zealand Agriculture," 2006 Annual meeting, July 23-26, Long Beach, CA 21133, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Kaye-Blake, William & Saunders, Caroline M. & Fairweather, John, 2005. "Optimal uptake of second-generation genetically-modified crops," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137932, Australian Agricultural and Resource Economics Society.

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