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Genetically Modified Crops and Product Differentiation: Trade and Welfare Effects in the Soybean Complex
Author(s) -
Sobolevsky Andrei,
Moschini GianCarlo,
Lapan Harvey
Publication year - 2005
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/j.1467-8276.2005.00752.x
Subject(s) - partial equilibrium , rest (music) , product (mathematics) , welfare , economics , production (economics) , general equilibrium theory , world trade , agricultural economics , international trade , microeconomics , mathematics , market economy , medicine , geometry , cardiology
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.