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Genetically Modified Crops, Corporate Pricing Strategies, and Farmers' Adoption: The Case of Bt Cotton in Argentina
Author(s) -
Qaim Matin,
Janvry Alain
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 - 10.1111/1467-8276.00490
Subject(s) - bt cotton , monopoly , contingent valuation , valuation (finance) , willingness to pay , economics , genetically modified organism , pareto principle , pareto optimal , genetically modified crops , microeconomics , business , agricultural science , agricultural economics , industrial organization , microbiology and biotechnology , multi objective optimization , operations management , finance , mathematics , gene , biochemistry , chemistry , environmental science , biology , mathematical optimization , transgene
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.