Author: Irena Vasileva TsvetkovaPublisher:
ISBN:
Category : Cottonseed
Languages : en
Pages : 65
Book Description
My dissertation analyses the effect of technology on consumers and producers in the U.S. cottonseed industry. The industry has experienced a sharp innovation spur since the commercialization of genetically-modified seed in 1996. Product differentiation has increased many&ndashfold due to these new technologies giving rise to concerns about market power and to a much larger menu of choices for farmers. The biotechnology and seed-producer sectors have adapted to these changes by engaging in rapid consolidation (Fuglie et al., 2011). In the meantime, farmers have almost fully adopted genetically-modified seed in the 17 years since their introduction. The first chapter estimates a structural discrete-choice demand model and analyzes product substitution patterns. I deal with the problem of dimensionality with the aid of a great data set and by using a demand system that reduces the dimensionality problem yet does not restrict substitution patterns. I use several sources of exogenous variation to obtain consistent estimates. I find that genetically-modified seed are preferred to conventional seed and that preferences vary by individual. The second chapter looks at the economic effects from new product introductions. In the context of industry transformations of the past 17 years biotech companies have been accused of using innovation to reap surplus from farmers. I address this concern by looking at one of the more controversial genetic innovations in cottonseed. Using demand estimates from the first chapter and under assumptions about the nature of competition, I simulate prices that would clear the market without the innovation. This allows me to calculate changes in farmer surplus and in seed firm variable profits. I find that both farmers and seed firms benefited from this biotech innovation in cottonseed. The third chapter measures the effect of technology and market factors on product turnover rate. While the introduction of new production technologies has definitely increased the number of products offered, the isolated effect of industry consolidation on product availability is unclear. I test five hypotheses on product turnover and limit my analysis to products introduced and dropped out of the market within the observed period to estimate the effects of technology and concentration on survival. I find that genetically-modified seed survives longer than conventional seed and that products sold by bigger vertically-integrated seed firms have a longer product life. This could negatively affect the investment decisions of smaller local seed firms and decrease the availability of seed specifically adapted to meet local climate and soil conditions.
