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An Analysis of Bundle Pricing: The Case of the Corn Seed Market

Author

Listed:
  • Shi, Guanming

    (U of Wisconsin)

  • Chavas, Jean-Paul

    (U of Wisconsin)

  • Stiegert, Kyle

    (U of Wisconsin)

Abstract

The paper investigates bundle pricing under imperfect competition. In a multiproduct context, the substitution/complementarity relationships among products can affect pricing in complex ways. This is used to motivate multi-product generalizations of the Herfindahl-Hirschmann index, which capture cross-market effects of imperfect competition on bundle pricing. Applied to the US corn seed market, the analysis investigates the pricing of conventional seeds and patented biotech seeds. For bundled biotech seeds, it finds strong evidence of sub-additive bundle pricing, thus rejecting standard component pricing. The econometric results document how increases in traditional and cross-market measures of imperfect competition contribute to higher seed prices.

Suggested Citation

  • Shi, Guanming & Chavas, Jean-Paul & Stiegert, Kyle, 2008. "An Analysis of Bundle Pricing: The Case of the Corn Seed Market," Staff Paper Series 529, University of Wisconsin, Agricultural and Applied Economics.
    • Handle: RePEc:ecl:wisagr:529
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    Cited by:

    1. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Incentives," Working Papers hal-02805961, HAL.
    2. Fernandez-Cornejo, Jorge & Livingston, Michael J. & Mitchell, Lorraine & Wechsler, Seth, 2014. "Genetically Engineered Crops in the United States," Economic Research Report 164263, United States Department of Agriculture, Economic Research Service.
    3. 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.
    4. Yoo, Do-il, 2012. "Individual and Social Learning in Bio-technology Adoption: The Case of GM Corn in the U.S," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124975, Agricultural and Applied Economics Association.
    5. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition: Economic Conditions and Incentives," Working Papers hal-02805961, HAL.
    6. Mélanie Jaeck & Robert Lifran & Hubert Stahn, 2012. "Emergence of Organic Farming under Imperfect Competition," AMSE Working Papers 1239, Aix-Marseille School of Economics, France.
    7. Nolan, Elizabeth & Santos, Paulo, 2009. "Evidence for increasing concentration in plant breeding industries in the United States and the European Union," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48060, Australian Agricultural and Resource Economics Society.

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