Agribusiness & Applied Economics

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Research from the Department of Agribusiness & Applied Economics. The department website may be found at https://www.ag.ndsu.edu/agecon

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Browsing Agribusiness & Applied Economics by Subject "Agricultural biotechnology -- Economic aspects."

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    Pricing Genetically Modified Output Traits and Effects on Competing Technologies
    (North Dakota State University, 2007) Johnson, Adam Michael
    This study develops a framework for pricing output traits derived from agriculture biotechnology and the effects on competing technologies post-introduction of the genetically modified (GM) variety. The price impact model determines processor or consumer adoption rates and changes in processor, farmer, and tech firm surplus as a result of the release of the new GM variety. Several implications result from this research. First, adoption of the GM variety may not be as high as expected due to the lower cost of using conventional varieties for processing or consumption inputs. Second, both processors who adopt the GM variety and those who continue to use conventional varieties will have an increase in surplus as a result of the introduction of the GM variety. Lower costs of conventional varieties will also result in new entrants into the market.
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    The Valuation of Agricultural Biotechnology: The Real Options Approach
    (North Dakota State University, 2008) Flagg, Ian Marshall
    This study develops a real options model of agbiotechnology and is applied to three genetically modified (GM) traits. Each trait is evaluated as growth options where technical or marketing milestones must be completed before management can exercise the option to invest further in trait development. The real options values are evaluated by employing a binomial tree which is simulated using distributions for random elements within stages of the growth option. Mean option values were negative for the discovery stage for fusarium-resistant wheat and for all but the regulatory submission stage for Roundup Ready wheat. The length of the regulatory submission stage had the greatest negative impact on the value of the option while the ability of the firm to maximize technology-use-fees had the greatest positive impact. Additionally, traits adapted to crops with larger potential market size are more likely to be in the money than traits developed for smaller market segments.