Title

Genetically Modified Crop Innovations and Product Differentiation: Trade and Welfare Effects in the Soybean Complex

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

2005

Journal or Book Title

American Journal of Agricultural Economics

Volume

87

Issue

3

First Page or Article ID Number

621

Last Page

644

DOI

10.1111/j.1467-8276.2005.00752.x

Abstract

A partial equilibrium four-region world trade model for the soybean complex is developed in which Roundup Ready (RR) products are weakly inferior substitutes to conventional ones, RR seeds are priced at a premium, and costly segregation is necessary to separate conventional and biotech products. Solution of the calibrated model illustrates how incomplete adoption of RR technology arises in equilibrium. The United States, Argentina, Brazil, and the Rest of the World (ROW) all gain from the introduction of RR soybeans, although some groups may lose. The impacts of RR production or import bans by the ROW or Brazil are analyzed. U.S. price support helps U.S. farmers, despite hurting the United States and has the potential to improve world efficiency.

JEL Classification

F13, F14, O13, Q16, Q17, Q18

Comments

This is a working paper of an article from American Journal of Agricultural Economics 87 (2005): 621, doi: 10.1111/j.1467-8276.2005.00752.x.