Genetically Modified Crops, Corporate Pricing Strategies, and Farmers’ Adoption: The Case of Bt Cott
Matin Qaim and Alain de Janvry, “Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina” American Journal of Agricultural Economics, Vol. 85, No. 4, (Nov 2003), pp 814-828.
This article analyzes adoption and impacts of Bt cotton in Argentina against the background of monopoly pricing. Based on survey data, it is shown that the technology significantly reduces insecticide applications and increases yields; however, these advantages are curbed by the high price charged for genetically modified seeds. Using the contingent valuation method, it is shown that farmers' average willingness to pay is less than half the actual technology price. A lower price would not only increase benefits for growers, but could also multiply company profits, thus, resulting in a Pareto improvement. Implications of the sub-optimal pricing strategy are discussed.
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