Incentive to reduce crop trait durability

Stefan Ambec, Corinne Langinier and Stéphane Lemarié

No 19251, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: Inbred line seed producers face competition from their own consumers: farmers who save part of their harvest can costly self-produce. To reduce this competition, seed producers can switch to non-durable hybrid seed production. In a two-period model, we investigate what is the impact of crop durability on self-production, pricing strategies and switching decision. We first study the pricing decisions and switching decisions of an inbred line seed monopoly. Then, we analyze how the monopoly's behavior is affected by the entry of a hybrid seed producer. We also examine how the introduction of royalties on farmers who self-produce improves efficiency. Our main finding is that, for some constellation of costs, an inbred line seed monopoly has an incentive to produce technologically dominated hybrid seed in order to extract more surplus from farmers. Along the same lines, an inbred line monopoly has an incentive to let a hybrid seed producer enters the market for discrimination purposes.

Keywords: Crop; Production/Industries (search for similar items in EconPapers)
Pages: 30
Date: 2005
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Incentives to Reduce Crop Trait Durability (2008)
Working Paper: Incentive to Reduce Crop Trait Durability (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19251

DOI: 10.22004/ag.econ.19251

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