State-Contingent Demand for Herbicide-Tolerance Seed Trait

David Hennessy and Alexander Saak ()

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Suppose a farmer had to apply a herbicide pre-emergence or not at all. The advent of a herbicide-tolerance trait innovation then provides the option to wait for more information before making a state-contingent post-emergence application. This option to wait can increase or decrease average herbicide use. For heterogeneous acre types, trait royalties increase with the level of uncertainty about the extent of weed damage. Royalties are largest when acre infestation susceptibility types are bunched around the type indifferent to applying the herbicide in the absence of the trait. The trait complements (substitutes for) information technologies that facilitate informed post-emergence (pre-emergence) decisions.

Date: 2002-12-20
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Published in Journal of Agricultural and Resource Economics, April 2003, vol. 28

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Journal Article: State-Contingent Demand for Herbicide-Tolerance Seed Trait (2003)
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