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The pricing of innovations: An application to specialized corn traits

Author

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  • Corinne Alexander

    (Department of Agricultural and Resource Economics,, University of California at Davis, One Shields Avenue,, Davis, CA 95616-8512. E-mail: corinne@primal.ucdavis.edu,, goodhue@primal.ucdavis.edu)

  • Rachael E. Goodhue

    (Department of Agricultural and Resource Economics,, University of California at Davis, One Shields Avenue,, Davis, CA 95616-8512. E-mail: corinne@primal.ucdavis.edu,, goodhue@primal.ucdavis.edu)

Abstract

One concern regarding the growing agricultural biotechnology industry is the potential for these firms to exercise market power when pricing their innovations, which would affect the magnitude and distribution of resulting welfare gains. We argue that competition across production systems limits the exercise of such market power by suppliers. In order to examine the demand for these innovations, we evaluate the producer's returns to planting patented seed innovations, using a calibrated optimization model of a south-central Iowa corn producer's adoption decision. Overall, our results suggest that patented seed innovations do not increase the market power of biotechnology firms in the relevant market for production systems. [EconLit subject codes: L190, O330, Q120] © 2002 Wiley Periodicals, Inc.

Suggested Citation

  • Corinne Alexander & Rachael E. Goodhue, 2002. "The pricing of innovations: An application to specialized corn traits," Agribusiness, John Wiley & Sons, Ltd., vol. 18(3), pages 333-348.
    • Handle: RePEc:wly:agribz:v:18:y:2002:i:3:p:333-348
    DOI: 10.1002/agr.10023
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    References listed on IDEAS

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    1. Giancarlo Moschini & Harvey Lapan & Andrei Sobolevsky, 2000. "Roundup ready® soybeans and welfare effects in the soybean complex," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 33-55.
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    1. Alexander, Corinne E., 2002. "The Role Of Seed Company Supplied Information In Farmers' Decisions," 2002 Annual meeting, July 28-31, Long Beach, CA 19617, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    2. Alexander, Corinne E. & Fernandez-Cornejo, Jorge & Goodhue, Rachael E., 2003. "Farmers' Adoption of Genetically Modified Varieties with Input Traits," Research Reports 11928, University of California, Davis, Giannini Foundation.
    3. Paul, Catherine J. Morrison & Nehring, Richard, 2005. "Product diversification, production systems, and economic performance in U.S. agricultural production," Journal of Econometrics, Elsevier, vol. 126(2), pages 525-548, June.
    4. Dillen, Koen & Tollens, Eric & Wesseler, Justus, 2010. "The Barroso Proposal Of Nationalizing Gmapproval: A Look At Ht Sugar Beets Under Changed European Sugar Policy," 14th ICABR Conference, June 16-18, 2010, Ravello, Italy 188086, International Consortium on Applied Bioeconomy Research (ICABR).
    5. Catherine Morrison Paul, 2003. "Productivity and Efficiency Measurement in Our “New Economy”: Determinants, Interactions, and Policy Relevance," Journal of Productivity Analysis, Springer, vol. 19(2), pages 161-177, April.
    6. Matty Demont & Marie Cerovska & Wim Daems & Koen Dillen & József Fogarasi & Erik Mathijs & František Muška & Josef Soukup & Eric Tollens, 2008. "Ex Ante Impact Assessment under Imperfect Information: Biotechnology in New Member States of the EU," Journal of Agricultural Economics, Wiley Blackwell, vol. 59(3), pages 463-486, September.
    7. Dillen, Koen & Demont, Matty & Tollens, Eric, 2008. "Modelling heterogeneity to estimate the ex ante value of biotechnology innovations," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43945, European Association of Agricultural Economists.

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