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Incentive to Reduce Crop Trait Durability

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  • Ambec, Stefan
  • Langinier, Corinne
  • Lemarie, Stephane

Abstract

To reduce the competition from farmers who self-produce seed, an inbred line seed producer can switch to nondurable hybrid seed. In a two-period model we investigate the impact of crop durability on self-production, pricing and switching decisions, and we examine the impact of license fees paid by self-producing farmers. First, in an inbred line seed monopoly model, we find that the monopolist may produce technologically dominated hybrid seed in order to extract more surplus from farmers. Further, the introduction of license fees improves efficiency. Second, we study how the monopolist's behavior is affected by the entry of a nondurable hybrid seed producer. We show that the inbred line seed producer might benefit from competing with a technologically dominated hybrid seed producer, as this allows for consumers' discrimination.

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  • Ambec, Stefan & Langinier, Corinne & Lemarie, Stephane, 2006. "Incentive to Reduce Crop Trait Durability," Staff General Research Papers Archive 12525, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:12525
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    Cited by:

    1. Khachaturyan, Marianna & Yiannaka, Amalia, 2012. "The Market Acceptance And Welfare Impacts Of Genetic Use Restriction Technologies (Gurts)," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126880, International Association of Agricultural Economists.
    2. Hervouet, Adrien & Langinier, Corinne, 2015. "Plant Breeders’ Rights, Patents and Incentives to Innovate," Working Papers 2015-7, University of Alberta, Department of Economics.
    3. Eaton, Derek, 2015. "Innovation and IPRs for Agricultural Crop Varieties as Intermediate Goods," 2015 Conference, August 9-14, 2015, Milan, Italy 211581, International Association of Agricultural Economists.
    4. Khachaturyan, Marianna & Yiannaka, Amalia, 2006. "The Market Acceptance and Welfare Impacts of Genetic Use Restriction Technologies (GURTs)," 2006 Annual meeting, July 23-26, Long Beach, CA 21329, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. Derek Eaton, 2013. "Innovation and IPRs in the Agricultural Seed Sector," CIES Research Paper series 19-2013, Centre for International Environmental Studies, The Graduate Institute.
    6. Baudry Marc & Hervouet Adrien, 2016. "Innovation in the Seed Market: The Role of IPRs and Commercialization Rules," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 14(1), pages 51-68, May.
    7. Eaton, Derek, 2014. "A model of IPRs in the international supply chain of seeds and agricultural production," 2014 International Congress, August 26-29, 2014, Ljubljana, Slovenia 182643, European Association of Agricultural Economists.
    8. Marc Baudry & Adrien Hervouet, 2014. "Promoting innovation on the seed market and biodiversity: the role of IPRs and commercialisation rules," EconomiX Working Papers 2014-32, University of Paris Nanterre, EconomiX.

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