Monopolistic pricing power for transgenic crops when technology adopters face irreversible benefits and costs
Pricing of biotechnology innovation under a patent grant is reconsidered in a model with uncertain returns and irreversible costs and benefits. Past results on restricted monopoly pricing in the presence of competing technologies showed that pricing power is reduced. The timing of adoption of an innovation is delayed and the pricing power of the restricted monopolist is further reduced when uncertainty and irreversibility is considered. The presence of irreversible benefits results in increased willingness-to-pay for the innovation, accelerating adoption, and increasing the innovator's restricted monopolist pricing power. Using Monte-Carlo simulation, the quantitative effects were approximated by a linear function through the hyper-plane.
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Volume (Year): 11 (2004)
Issue (Month): 15 ()
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- Demont, Matty & Wesseler, Justus & Tollens, Eric, 2003.
"Biodiversity versus Transgenic Sugar Beet: The One Euro Question,"
2003 Annual Meeting, August 16-22, 2003, Durban, South Africa
25831, International Association of Agricultural Economists.
- Eric Tollens, 2004. "Biodiversity versus transgenic sugar beet: the one euro question," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 1-18, March.
- Demont, Matty & Wesseler, Justus & Tollens, Eric, 2002. "Biodiversity Versus Transgenic Sugar Beet: The One Euro Question," Working Papers 31859, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
- José Benjamin Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 360-369.
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