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The pricing of innovations: An application to specialized corn traits

  • Corinne Alexander

    (Department of Agricultural and Resource Economics,, University of California at Davis, One Shields Avenue,, Davis, CA 95616-8512. E-mail: corinne@primal.ucdavis.edu,, goodhue@primal.ucdavis.edu)

  • Rachael E. Goodhue

    (Department of Agricultural and Resource Economics,, University of California at Davis, One Shields Avenue,, Davis, CA 95616-8512. E-mail: corinne@primal.ucdavis.edu,, goodhue@primal.ucdavis.edu)

One concern regarding the growing agricultural biotechnology industry is the potential for these firms to exercise market power when pricing their innovations, which would affect the magnitude and distribution of resulting welfare gains. We argue that competition across production systems limits the exercise of such market power by suppliers. In order to examine the demand for these innovations, we evaluate the producer's returns to planting patented seed innovations, using a calibrated optimization model of a south-central Iowa corn producer's adoption decision. Overall, our results suggest that patented seed innovations do not increase the market power of biotechnology firms in the relevant market for production systems. [EconLit subject codes: L190, O330, Q120] © 2002 Wiley Periodicals, Inc.

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File URL: http://hdl.handle.net/10.1002/agr.10023
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Article provided by John Wiley & Sons, Ltd. in its journal Agribusiness.

Volume (Year): 18 (2002)
Issue (Month): 3 ()
Pages: 333-348

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Handle: RePEc:wly:agribz:v:18:y:2002:i:3:p:333-348
Contact details of provider: Web page: http://onlinelibrary.wiley.com/journal/10.1002/(ISSN)1520-6297

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  1. Begemann, Brett D., 1997. "Competitive Strategies Of Biotechnology Firms: Implications For U.S. Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(01), July.
  2. Giancarlo Moschini & Harvey Lapan & Andrei Sobolevsky, 2000. "Roundup ready� soybeans and welfare effects in the soybean complex," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 33-55.
  3. McBride, William D. & Books, Nora, 2000. "Survey Evidence On Producer Use And Costs Of Genetically Modified Seed," Proceedings:Transitions in Agbiotech: Economics of Strategy and Policy, June 24-25, 1999, Washington, D.C. 26009, Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance.
  4. Renkoski, Matthew A., 1997. "Marketing Strategies Of Biotechnology Firms: Implications For U.S. Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(01), July.
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