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Strategic Behavior and Consolidation in the Agricultural Biotechnology Industry
Author(s) -
Johnson Stanley R.,
Melkonyan Tigran A.
Publication year - 2003
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.1111/1467-8276.00114
Subject(s) - consolidation (business) , complementarity (molecular biology) , industrial organization , agriculture , agricultural biotechnology , business , economics , finance , ecology , biology , genetics
We develop a model explaining the consolidation patterns in the agricultural biotechnology industry. Among different consolidation and cooperation mechanisms, we consider collaborative and licensing agreements, joint ventures, acquisitions, and exchanges of ownership and spin‐offs. The key results derive from the benefits of coordinated actions, distinction between transferable and nontransferable payoffs, the substitutability, complementarity, and the importance of the managers' noncontractible investments, and access and expansion of markets. Results from the model are used to examine the cooperation and consolidation activities for four major players in the agricultural biotechnology industry, DuPont, Dow Chemical, Monsanto, and Novartis.