Competition, Externalities, and Input Substituting Technologies

Posted: 21 Nov 2002

See all articles by David A. Hennessy

David A. Hennessy

Iowa State University - Department of Economics

Abstract

The period 1997-2000 saw a rapid global consolidation of crop seed companies. The emerging companies are applying genetic engineering to exploit complementarities and substitutabilities between seed and other crop inputs. This article develops a model of competing technologies where one substitutes for a conventional input. A monopolist may cross-subsidize a technology that substitutes for an input in order to price discriminate between user types. In duopoly, a socially excessive or insufficient share of acres may be subject to an input substituting technology. Welfare improving regulations are identified in the case where a technology substitutes for an externality generating input.

Suggested Citation

Hennessy, David A., Competition, Externalities, and Input Substituting Technologies. Available at SSRN: https://ssrn.com/abstract=312051

David A. Hennessy (Contact Author)

Iowa State University - Department of Economics ( email )

260 Heady Hall
Ames, IA 50011
United States
515-294-6171 (Phone)

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