The Effect of Market Structure on Pest Resistance Buildup

24 Pages Posted: 4 Nov 2005

See all articles by Jennifer Alix‐Garcia

Jennifer Alix‐Garcia

University of San Francisco - College of Arts & Sciences

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics

Date Written: August 31, 2005

Abstract

In this paper we present a continuous time optimal control analysis of resistance buildup in agricultural chemicals when the supplier is a monopolist. We solve a general model and examine the solutions for Cobb-Douglas demand, including a simulation of changes in the interest rate and pest growth rate. The central finding is that with a monopolistic supplier, resistance buildup is lower than socially optimal. This directly opposes the standard result in the resistance literature. This perspective thus allows us to develop a policy prescription that depends on the structure of the industry supplying the pesticide. It suggests that there may be underuse of chemicals and a slow buildup of resistance in the early stages of the product life when it is controlled by a monopolist. However, when the patent expires and the supply of the chemical becomes more competitive, then there may be tendency to overuse the chemicals.

Keywords: optimal control, pesticide regulation, monopolies

JEL Classification: Q20, Q28, L51

Suggested Citation

Alix-Garcia, Jennifer and Zilberman, David, The Effect of Market Structure on Pest Resistance Buildup (August 31, 2005). Available at SSRN: https://ssrn.com/abstract=836164 or http://dx.doi.org/10.2139/ssrn.836164

Jennifer Alix-Garcia (Contact Author)

University of San Francisco - College of Arts & Sciences ( email )

San Francisco, CA 94117
United States

HOME PAGE: http://www.usfca.edu/artsci/fac_staff/A/alix-garcia_jennifer.html

David Zilberman

University of California, Berkeley - Department of Agricultural & Resource Economics ( email )

Berkeley, CA 94720
United States

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