Producer Surplus Distributions in GM Crops: The Ignored Impacts of Roundup Ready Wheat
By: Wilson, William W.; Huso, Scott R.
Wilson, William W.; Huso, Scott R., Producer Surplus Distributions in GM Crops: The Ignored Impacts of Roundup Ready Wheat, Journal of Agricultural and Resource Economics, Volume 31, Issue 2, August 2006, Pages 339-354
Release of a genetically modified (GM) crop variety would lower prices of competing pesticides used on conventional varieties. This causes an increase in surplus for those farmers who adopt the GM variety, as well as for those who plant the conventional variety. A Cournot model was developed to determine the equilibrium quantities of conventional pesticides. A market with conventional wheat was compared to a market with both conventional and GM wheat varieties to identify price decreases of the conventional pesticide as a result of the GM trait introduction.