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An Analysis of Pricing in the U.S. Cotton Seed Market

Author

Listed:
  • Shi, Guanming
  • Stiegert, Kyle W.
  • Chavas, Jean-Paul

Abstract

The purpose of the research in this paper is to investigate the impact of differentiated vertical strategies by agricultural biotechnology firms in the U.S. cottonseed market. The model advances the measurement of industry concentration to consider substitution/complementarity relationships among differentiated products delivered under different vertical structures. We find evidence of sub-additive pricing in the stacking of bundled biotech traits. Prices paid by farmers for cottonseed sold under vertical integration are found to be higher than under licensing. The model is flexible and allows for evaluation of the effects of changing market structures. The parameters on traditional measures of concentration indicate that higher concentration leads to higher prices. The effects of cross-market concentrations stress the need to conduct the analysis in a multi-market context.

Suggested Citation

  • Shi, Guanming & Stiegert, Kyle W. & Chavas, Jean-Paul, 2009. "An Analysis of Pricing in the U.S. Cotton Seed Market," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 51617, Agricultural and Applied Economics Association.
  • Handle: RePEc:ags:aaea09:51617
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    File URL: http://purl.umn.edu/51617
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    References listed on IDEAS

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    1. Goodhue, Rachael E & Rausser, Gordon C. & Scotchmer, Suzanne & Simon, Leo K., 2002. "Biotechnology, Intellectual Property and Value Differentiation in Agriculture," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt83h3x830, Department of Agricultural & Resource Economics, UC Berkeley.
    2. Shi, Guanming & Chavas, Jean-Paul & Stiegert, Kyle, 2008. "An Analysis of Bundle Pricing: The Case of the Corn Seed Market," Working Papers 201445, University of Wisconsin-Madison, Department of Agricultural and Applied Economics, Food System Research Group.
    3. Guanming Shi, 2009. "Bundling and Licensing of Genes in Agricultural Biotechnology," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 91(1), pages 264-274.
    4. Shi, Guanming & Chavas, Jean-Paul, 2009. "On Pricing and Vertical Organization of Differentiated Products," Staff Paper Series 535, University of Wisconsin, Agricultural and Applied Economics.
    5. Gregory D. Graff & Gordon C. Rausser & Arthur A. Small, 2003. "Agricultural Biotechnology's Complementary Intellectual Assets," The Review of Economics and Statistics, MIT Press, vol. 85(2), pages 349-363, May.
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    Cited by:

    1. Fernandez-Cornejo, Jorge & Valle, Karen, 2014. "A Hedonic Model of Corn Seed Prices," 2014 Annual Meeting, July 27-29, 2014, Minneapolis, Minnesota 169667, Agricultural and Applied Economics Association.

    More about this item

    Keywords

    Modal Vertical Strategy; imperfect competition; cotton seed; biotechnology; Agricultural and Food Policy; Demand and Price Analysis; Industrial Organization; L13; L4; L65;

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L65 - Industrial Organization - - Industry Studies: Manufacturing - - - Chemicals; Rubber; Drugs; Biotechnology; Plastics

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