Incentive to Reduce Crop Trait Durability

Stefan Ambec (), Corinne Langinier () and Stéphane Lemarié ()

Staff General Research Papers from Iowa State University, Department of Economics

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.

Keywords: Durable good; nondurable good; licenses. (search for similar items in EconPapers)
JEL-codes: Q1 (search for similar items in EconPapers)
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Date: 2006-03-14
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Forthcoming in American Journal of Agricultural Economics

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http://www.econ.iastate.edu/research/webpapers/paper_12525_06007.pdf (application/pdf)

Related works:
Working Paper: Incentive to reduce crop trait durability (2005)
Journal Article: Incentives to Reduce Crop Trait Durability (2008)
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Persistent link: http://EconPapers.repec.org/RePEc:isu:genres:12525

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