Regulating transgenic soybean production in Argentina

Pascale Phelinas and Sonia Schwartz

No 201721, Working Papers from CERDI

Abstract: This article investigates how to regulate transgenic soybean production in Argentina. Taking into account the broad range of negative externalities associated with transgenic soybean production, we explore the effects of two different policy instruments, namely a subsidy for non-transgenic soybean and production quotas for transgenic soybean. Taking into account the political and economic context in Argentina, we demonstrate that auctioned production quotas are the best way to achieve the regulation of transgenic soybean production. However, the organization of the agricultural sector in Argentina is such that "raising rivals’ costs" behavior could occur on the quota market although the output price is set exogenously. We show that auctioned quotas limit this anti-competitive behavior. Finally, we demonstrate that introducing a shadow cost of public funds leads to an increase in the optimal production level of transgenic soybean.

Keywords: Transgenic soybean; Argentina; Glyphosate; Environmental regulation; Production quotas; Market power. (search for similar items in EconPapers)
JEL-codes: Q32 Q38 Q58 (search for similar items in EconPapers)
Pages: 26
Date: 2017-11
New Economics Papers: this item is included in nep-agr
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Working Paper: Regulating transgenic soybean production in Argentina (2017)
Working Paper: Regulating transgenic soybean production in Argentina (2017)
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