Chapter 6 Spatial Pricing of Genetically Modified Hybrid Corn Seeds

Abstract

Objective – The current biotechnology revolution has been associated with newly developed genetic modifications (GM) that offer new prospects for increasing agricultural productivity. This has stimulated a rapid adoption of GM corn hybrids by U.S. farmers. Yet, there is concern about the structure of competition among biotech firms that own patents over GM traits. This chapter evaluates the spatial differences in pricing of biotech corn hybrids, with a focus on the fringe versus core regions of the U.S. Corn Belt.

Methods – The analysis examines how local conditions and market concentrations affect the pricing of GM corn hybrids in different locations.

Results – We find evidence of more extensive subadditive pricing in the fringe region. We also examine how both own- and cross-market concentrations affect prices across regions. For GM hybrids, the results show that market power is generally more prevalent in the core region compared to the fringe.

Conclusions – The evidence shows that the pricing of GM corn hybrids varies across space. The observed pricing schemes benefit farmers more in the fringe than in the core region of the Corn Belt.

Citation

Stiegert, K.W., Shi, G. and Chavas, J.-P. (2011), "Chapter 6 Spatial Pricing of Genetically Modified Hybrid Corn Seeds", Carter, C.A., Moschini, G. and Sheldon, I. (Ed.) Genetically Modified Food and Global Welfare (Frontiers of Economics and Globalization, Vol. 10), Emerald Group Publishing Limited, Leeds, pp. 149-171. https://doi.org/10.1108/S1574-8715(2011)0000010011