Premium
Valuing product innovation: genetically engineered varieties in US corn and soybeans
Author(s) -
Ciliberto Federico,
Moschini GianCarlo,
Perry Edward D.
Publication year - 2019
Publication title -
the rand journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.687
H-Index - 108
eISSN - 1756-2171
pISSN - 0741-6261
DOI - 10.1111/1756-2171.12290
Subject(s) - counterfactual thinking , product (mathematics) , economic surplus , welfare , genetically modified maize , genetically engineered , economics , production (economics) , agricultural economics , crop , genetically modified organism , agricultural science , genetically modified crops , agronomy , biology , microeconomics , mathematics , market economy , philosophy , epistemology , transgene , biochemistry , geometry , gene
We develop a discrete‐choice model of differentiated products for US corn and soybean seed demand to study the welfare impact of genetically engineered (GE) crop varieties. Using a unique data set spanning the period 1996–2011, we find that the welfare impact of the GE innovation is significant. In the last five years of the period analyzed, our preferred counterfactual indicates that total surplus due to GE traits was $5.18 billion per year, with seed manufacturers appropriating 56% of this surplus. The seed industry obtained more surplus from GE corn, whereas farmers received more surplus from GE soybeans.