Trait Stacking, Licensing, and Seed Firm Acquisitions on Genetically Modified Grains: A Strategic Analysis
By: Wilson, William W.; Huso, Scott R.
Wilson, William W.; Huso, Scott R., Trait Stacking, Licensing, and Seed Firm Acquisitions on Genetically Modified Grains: A Strategic Analysis, Journal of Agricultural and Resource Economics, Volume 33, Issue 3, December 2008, Pages 382-401
Commercialization of genetically modified (GM) traits leads to interesting strategic questions for agbiotechnology and seed firms. The purpose of the study is to evaluate equilibrium strategies of agbiotechnology and seed firms regarding commercialization of GM traits. Two game theory models were developed to examine equilibrium strategies. In the first, both agbiotechnology firms have commercialization strategies of licensing or not. In the second, the agbiotechnology firm also has the strategic option to purchase a seed form as a commercialization strategy. Results indicate that the equilibrium strategy would be for each of the agbiotechnology firms to license their traits, and the seed firm would release a stacked trait. However, order of play matters and impacts the equilibrium. Finally, in the second game, the equilibrium is for the agbiotechnology company to purchase a seed firm. Each of these decisions is highly strategic and reflects the current strategic challenges in the agbiotechnology industry.