Genetically Modified Crops and Product Differentiation: Trade and Welfare Effects in the Soybean Complex |
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| Authors: | Andrei Sobolevsky GianCarlo Moschini Harvey Lapan |
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| Affiliation: | Andrei Sobolevsky (Ph.D.) is a finance specialist at Sprint, Overland Park, Kansas;GianCarlo Moschini is professor and Pioneer Hi-Bred Endowed Chair in Science and Technology Policy, Department of Economics, Iowa State University;Harvey Lapan is University Professor, Department of Economics, Iowa State University. |
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| 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. |
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| Keywords: | biotechnology differentiated demand identity preservation international trade soybeans |
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