Competition, Externalities, and Input Substituting Technologies

15 Pages Posted: 1 Apr 2020

Date Written: May 2002


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.

Keywords: bundling, general equilibrium, heterogeneity, imperfect competition, pollution, substitutes, L130, Q130, Q160

Suggested Citation

Hennessy, David, Competition, Externalities, and Input Substituting Technologies (May 2002). American Journal of Agricultural Economics, Vol. 84, Issue 2, pp. 467-481, 2002, Available at SSRN: or

David Hennessy (Contact Author)

Iowa State University

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