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

Robert D. Weaver, Justus Wessler

Research output: Contribution to journalArticle

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 on 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 (US)
Pages (from-to)969-973
Number of pages5
JournalApplied Economics Letters
Volume11
Issue number15
DOIs
StatePublished - Dec 15 2004

Fingerprint

Transgenic crops
Costs and benefits
Market power
Innovation
Monopolist
Irreversibility
Pricing
Biotechnology
Willingness-to-pay
Innovation adoption
Innovators
Monopoly pricing
Uncertainty
Monte Carlo simulation
Patents

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

Cite this

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Monopolistic pricing power for transgenic crops when technology adopters face irreversible benefits and costs. / Weaver, Robert D.; Wessler, Justus.

In: Applied Economics Letters, Vol. 11, No. 15, 15.12.2004, p. 969-973.

Research output: Contribution to journalArticle

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