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State-Contingent Demand for Herbicide-Tolerance Seed Trait

  • Hennessy, David A.
  • Saak, Alexander

Suppose a farmer had to apply a herbicide pre-emergence or not at all. The advent of a herbicide-tolerance trait innovation then provides the option to wait for more information before making a state-contingent post-emergence application. This option to wait can increase or decrease average herbicide use. For heterogeneous acre types, trait royalties increase with the level of uncertainty about the extent of weed damage. Royalties are largest when acre infestation susceptibility types are bunched around the type indifferent to applying the herbicide in the absence of the trait. The trait complements (substitutes for) information technologies that facilitate informed post-emergence (pre-emergence) decisions.

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File URL: http://www.econ.iastate.edu/sites/default/files/publications/papers/paper_10123.pdf
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 10123.

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Date of creation: 20 Dec 2002
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Publication status: Published in Journal of Agricultural and Resource Economics, April 2003, vol. 28
Handle: RePEc:isu:genres:10123
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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