The product line strategy of a company selling seed with a licenced GM trait

Stéphane Lemarié (), Delia Baghdasaryan and Etienne Campens
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Stéphane Lemarié: GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], INRA - Institut National de la Recherche Agronomique
Delia Baghdasaryan: GAEL - Laboratoire d'Economie Appliquée de Grenoble - Grenoble INP - Institut polytechnique de Grenoble - Grenoble Institute of Technology - INRA - Institut National de la Recherche Agronomique - CNRS - Centre National de la Recherche Scientifique - UGA [2016-2019] - Université Grenoble Alpes [2016-2019], INRA - Institut National de la Recherche Agronomique
Etienne Campens: Lactalis

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Abstract: The economic impact of Genetically Modified Organisms (GMOs) depends heavily on the product line supplied by the seed companies. In this paper, we analyze the interlinking between seed product line and license contract signed between the seed company and the upstream agbiotech firm which owns the Genetically Modified (GM) trait. We show that if the farmers are sufficiently heterogeneous, the seed company prefers to price discriminate by supplying both GM and conventional seeds. In those circumstances, despite higher efficiency of the GM seed, the price increase is such that the farmer's surplus decreases. This loss may even outweigh the aggregate gains of the seed and the agbiotech companies, thereby leading to a total welfare loss.

Keywords: strategie de l'entreprise; ogm; industrie des semences; discrimination par les prix; licensing (search for similar items in EconPapers)
Date: 2017-05
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Citations: View citations in EconPapers (1)

Published in Journal of Agricultural and Food Industrial Organization, 2017, 15 (1), pp.n.a. ⟨10.1515/jafio-2016-0030⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01547179

DOI: 10.1515/jafio-2016-0030

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