Valuing Product Innovation: Genetically Engineered Varieties in U.S. Corn and Soybeans

63 Pages Posted: 20 Dec 2017 Last revised: 2 Jun 2019

See all articles by Federico Ciliberto

Federico Ciliberto

University of Virginia - Department of Economics; Centre for Economic Policy Research (CEPR)

GianCarlo Moschini

Iowa State University - Department of Economics

Edward Perry

Kansas State University - Department of Agricultural Economics

Multiple version iconThere are 2 versions of this paper

Date Written: December 21, 2018

Abstract

We develop a discrete-choice model of differentiated products for U.S. corn and soybean seed demand to study the welfare impact of genetically engineered (GE) crop varieties. Using a unique dataset spanning the period 1996-2011, we find that the welfare impact of the GE innovation is significant. In the last five years of the period analyzed, our preferred counterfactual indicates that total surplus due to GE traits was $5.18 billion per year, with seed manufacturers appropriating 56% of this surplus. The seed industry obtained more surplus from GE corn, whereas farmers received more surplus from GE soybeans.

Keywords: Discrete choice, Innovation, Nested logit, Product characteristics, Seed demand, Transgenic crops, Welfare

JEL Classification: L11, L13, O13, Q12

Suggested Citation

Ciliberto, Federico and Moschini, GianCarlo and Perry, Edward, Valuing Product Innovation: Genetically Engineered Varieties in U.S. Corn and Soybeans (December 21, 2018). Available at SSRN: https://ssrn.com/abstract=3088632 or http://dx.doi.org/10.2139/ssrn.3088632

Federico Ciliberto (Contact Author)

University of Virginia - Department of Economics ( email )

P.O. Box 400182
Charlottesville, VA 22904-4182
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

GianCarlo Moschini

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States

Edward Perry

Kansas State University - Department of Agricultural Economics ( email )

Manhatten, KS 66506-4001
United States

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