New Plant Engineering Techniques, R&D Investment, and International Trade

Stéphan Marette (), Anne-Célia Disdier, Anastasia Bodnar and John Beghin

Center for Agricultural and Rural Development (CARD) Publications from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: New Plant Engineering Techniques (NPETs) may significantly improve both production and quality of foods. Consumers and regulators around the world might be reluctant to accept such products and the global market penetration of these products may remain quite low. We develop a parsimonious economic model for R&D investment in food innovations to identify conditions under which NPET technology emerges in a context of international trade. The framework integrates consumers' willingness to pay (WTP) for the new food, the uncertainty of R&D processes, the associated regulatory cost of approval, and the competition between domestic and foreign products. With generic applicability, the model enables the quantitative analysis of new foods that could be introduced in markets and then traded across borders. We apply the framework to a hypothetical case of apples improved with NPETs. Simulation results suggest that import bans and high values of sunk cost can reduce R&D investment in NPETs to suboptimal levels.

Date: 2022-06
New Economics Papers: this item is included in nep-agr and nep-int
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Related works:
Journal Article: New plant engineering techniques, R&D investment and international trade (2023)
Working Paper: New Plant Engineering Techniques, R&D Investment, and International Trade (2021)
Working Paper: New Plant Engineering Techniques, R&D Investment, and International Trade (2021)
Working Paper: New Plant Engineering Techniques, R&D Investment, and International Trade (2021)
Working Paper: New Plant Engineering Techniques, R&D Investment, and International Trade (2021)
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