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On the Demand for a State-Contingent, Cost-Saving Seed Trait

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Abstract

Biotechnology has enriched the strategy set available to crop managers. Suppose a manager faces a decision between applying a pre-emergence pesticide or applying nothing at all. The advent of pesticide tolerance traits in plants admits the possibility of a state-contingent post-emergence application of pesticide. The innovation adds value in large part because it provides the manager with the option to wait for more information. For heterogeneous acre types, the determinants of trait royalties and of crop management strategies in equilibrium are studied. Pest resistance traits have different implications for crop management. Whereas a tolerance trait likely complements information technologies, the addition of a resistance trait may substitute for them.

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  • David A. Hennessy & Alexander E. Saak, 2002. "On the Demand for a State-Contingent, Cost-Saving Seed Trait," Center for Agricultural and Rural Development (CARD) Publications 02-wp321, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    • Handle: RePEc:ias:cpaper:02-wp321
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    References listed on IDEAS

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    1. Kalaitzandonakes, Nicholas G., 1999. "A Farm Level Perspective On Agrobiotechnology," Agricultural Outlook Forum 1999 32913, United States Department of Agriculture, Agricultural Outlook Forum.
    2. Jean-Daniel M. Saphores, 2000. "The Economic Threshold with a Stochastic Pest Population: A Real Options Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(3), pages 541-555.
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