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Modeling US Farmer Soybean Seed Choice with Path Dependencies: Inevitable Patented Seed Market Dominance?

Jenson Robert A. () and Christopher McIntosh
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Jenson Robert A.: Agricultural and Applied Economics, University of Wyoming, Laramie, WY, USA

Journal of Agricultural & Food Industrial Organization, 2016, vol. 14, issue 1, 69-79

Abstract: The growth in the US market share of soybeans including Monsanto’s patented “Roundup Ready” (RR1 and RR2) traits has been extraordinary. This growth is likely due to a number of factors that affect the number of competitor firms and individual farmers’ seed choices. This study outlines how two path dependencies, transition and expected fine, may be contributing. Herein, these path dependencies are explored to consider whether they are legitimate, how they might affect a farmer’s planting decisions and their possible effects on soybean seed markets. Our simulation models consider the number of periods for patented seed market share to converge from zero to 85%. Results indicate that the path dependencies create pockets of significant convergence influence over various alternative price ranges, i.e. the dependencies can accelerate or create a convergence that would not have existed without them. When a relatively large expected fine path or a strong version of the transition dependency is considered, the pocket includes reasonable price premiums for conventional and organic seed.

Date: 2016
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Handle: RePEc:bpj:bjafio:v:14:y:2016:i:1:p:69-79:n:2