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Strategic Behavior and Consolidation in the Agricultural Biotechnology Industry

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  • Stanley R. Johnson
  • Tigran A. Melkonyan

Abstract

We develop a model explaining the consolidation patterns in the agricultural biotechnology industry. Among different consolidation and cooperation mechanisms, we consider collaborative and licensing agreements, joint ventures, acquisitions, and exchanges of ownership and spin-offs. The key results derive from the benefits of coordinated actions, distinction between transferable and nontransferable payoffs, the substitutability, complementarity, and the importance of the managers' noncontractible investments, and access and expansion of markets. Results from the model are used to examine the cooperation and consolidation activities for four major players in the agricultural biotechnology industry, DuPont, Dow Chemical, Monsanto, and Novartis. Copyright 2003, Oxford University Press.

Suggested Citation

  • Stanley R. Johnson & Tigran A. Melkonyan, 2003. "Strategic Behavior and Consolidation in the Agricultural Biotechnology Industry," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(1), pages 216-233.
  • Handle: RePEc:oup:ajagec:v:85:y:2003:i:1:p:216-233
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    File URL: http://hdl.handle.net/10.1111/1467-8276.00114
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    Cited by:

    1. O'Shea, Lucy & Ulph, Alistair, 2008. "The role of pest resistance in biotechnology R&D investment strategy," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 213-228, March.
    2. Rousselière, Samira & Rousselière, Damien & Ramani, Shyama, 2016. "Innovation Led Alliances: Theory and application to the GM Plant Industry," 149th Seminar, October 27-28, 2016, Rennes, France 244949, European Association of Agricultural Economists.
    3. Taiji Furusawa & Keisaku Higashida & Jota Ishikawa, 2004. "Tariffs versus quotas in the presence of imperfect competition and cross-border externalities," Canadian Journal of Economics, Canadian Economics Association, vol. 37(2), pages 445-458, May.
    4. Yuri Kozenko & Konstantin Kozenko & Svetlana Zemlyanitsyna, 2015. "Peculiarities of National Systems of Global Agricultural Credit Cooperation and Their Adaptation to Russian Conditions," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 149-166.
    5. Sharmistha Bagchi-Sen & Jennifer Scully, 2007. "Strategies and External Relationships of Small and Medium-Sized Enterprises in the US Agricultural Biotechnology Sector," Environment and Planning C, , vol. 25(6), pages 844-860, December.

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