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Planting Decisions And Uncertain Consumer Acceptance Of Genetically Modified Crop Varieties

  • Saak, Alexander E.
  • Hennessy, David A.

There exists much uncertainty about consumer attitudes towards genetically modified foods. If it happens that sufficient (insufficient) acres are planted under non-modified seed to meet post-harvest demand, then a price premium will not (will) emerge for the non-modified varieties. A non-linearity originates in the fact that a price premium may be supported. This non-linearity interacts with the extent of demand uncertainty to determine equilibrium varietal plantings and the probability that post-harvest varietal prices will differ. Also, as planting approaches signals will be received by growers about the nature of demand they will be planting into. We show how the non-linearity affects the order on the types of signals that risk-neutral growers will prefer to receive.

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File URL: http://purl.umn.edu/20581
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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2001 Annual meeting, August 5-8, Chicago, IL with number 20581.

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Date of creation: 2001
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Handle: RePEc:ags:aaea01:20581
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  1. Milgrom, Paul & Shannon, Chris, 1994. "Monotone Comparative Statics," Econometrica, Econometric Society, vol. 62(1), pages 157-80, January.
  2. Jonathan Levin & Susan Athey, 2001. "The Value of Information in Monotone Decision Problems," Working Papers 01003, Stanford University, Department of Economics.
  3. Sergio H. Lence & Dermot J. Hayes, 2001. "Response to an Asymmetric Demand for Attributes: An Application to the Market for Genetically Modified Crops," Midwest Agribusiness Trade Research and Information Center (MATRIC) Publications 01-mwp5, Midwest Agribusiness Trade Research and Information Center (MATRIC) at Iowa State University.
  4. Lapan, Harvey E & Moschini, Giancarlo, 2000. "Incomplete Adoption of a Superior Innovation," Economica, London School of Economics and Political Science, vol. 67(268), pages 525-42, November.
  5. Fernandez-Cornejo, Jorge & McBride, William D., 2000. "Genetically Engineered Crops For Pest Management In U.S. Agriculture," Agricultural Economics Reports 33931, United States Department of Agriculture, Economic Research Service.
  6. Henry, Claude, 1974. "Investment Decisions Under Uncertainty: The "Irreversibility Effect."," American Economic Review, American Economic Association, vol. 64(6), pages 1006-12, December.
  7. Babcock, Bruce A., 1990. "Value of Weather Information in Market Equilibrium (The)," Staff General Research Papers 10592, Iowa State University, Department of Economics.
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