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Abstract
This paper investigates the market potential for a new technology such as a
genetically modified crop, which produces both a private and a public good. A
theoretical framework is developed, based on vertically differentiated products and
heterogeneous producer returns. Our setting corresponds to a system composed of a
biotech firm, individual farm, consumer and the government. We claim that
coordination among every single stage of the system is needed in order for the
adoption process to be successful and beneficial to all those involved. Our results
indicate that the market adaption of a genetically modified product depends on the
magnitude effect of the new technology on the incremental savings and costs as well
as consumers’ aversion and the carbon emission market price. In particular we
consider the carbon emissions market as an important instrument associated with the
reduction of the two negative parameters of production costs and consumers
aversion..