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          2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin >

Please use this identifier to cite or link to this item: http://purl.umn.edu/49186

Title: On Pricing and Vertical Organization of Differentiated Products: The Case of Soybean Seed Industry
Authors: Shi, Guanming
Chavas, Jean-Paul
Authors (Email): Shi, Guanming (gshi@wisc.edu)
Chavas, Jean-Paul (jchavas@wisc.edu)
Keywords: Vertical structures
pricing
imperfect competition
seed
biotechnology
JEL Codes: L13
L4
L65
Issue Date: 2009-04
Series/Report no.: Selected Paper
611496
Abstract: This paper investigates the pricing and vertical organization of differentiated products under imperfect competition. In a multiproduct context, a Cournot model is used to examine how substitution/complementarity relationships among products and vertical structures can affect the exercise of market power. This motivates a generalization of the Herfindahl-Hirschman index (termed VHHI) capturing how market concentration and vertical structures interact to influence prices of differentiated products. The analysis is applied to pricing of soybean seeds in the US over the period 2000-2007. The analysis considers two vertical structures employed by biotech firms: vertical integration and licensing. The econometric analysis finds evidence that vertical organization has significant effects on seed prices. These effects are found to vary depending on the institutional setup and the bundling of genetic material. The empirical evidence shows that complementarity and economies of scope can reduce the effects of market concentration on prices.
URI: http://purl.umn.edu/49186
Institution/Association: Agricultural and Applied Economics Association>2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin
Total Pages: 38
Collections:2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin

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