Monopolistic pricing power for transgenic crops when technology adopters face irreversible benefits and costs

R.D. Weaver, J.H.H. Wesseler

Research output: Contribution to journalArticleAcademicpeer-review

11 Citations (Scopus)

Abstract

Pricing of biotechnology innovation under a patent grant is reconsidered in a model with uncertain returns and irreversible costs and benefits. Past results oil restricted monopoly pricing in the presence of competing technologies showed that pricing power is reduced. The timing of adoption of an innovation is delayed and the pricing power of the restricted monopolist is further reduced when uncertainty and irreversibility is considered. The presence of irreversible benefits results in increased willingness-to-pay for the innovation. accelerating adoption.. and increasing the innovator's restricted monopolist pricing power. Using Monte-Carlo simulation. the quantitative effects were approximated by a linear function through the hyper-plane.
Original languageEnglish
Pages (from-to)969-974
JournalApplied Economics Letters
Volume11
Issue number15
DOIs
Publication statusPublished - 2004

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