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Abstract
Genetically modified (GM) soybean acreage has rapidly increased in the world
in the past decade and globally the majority of countries now use GM
soybeans to produce oil and meal for livestock and human consumption. Japan,
however, uses only Non-GM soybeans as widely recognized high quality
goods in vertically differentiated import soybeans in Japan, for direct human
consumption of which more than 80% are imported from the U.S., Canada,
and China. This research used the inverse residual demand model to estimate a
U.S.-Japan partial equilibrium trade model to test the existence of market
power in the Japanese Non-GM soybean import market. The U.S.-Japan partial
equilibrium trade model incorporated the U.S. residual Non-GM soybean
supply for Japan, the Japanese residual demand for U.S. Non-GM soybeans,
and the equilibrium condition, where the U.S. residual Non-GM soybean
supply equals the Japanese residual Non-GM soybean demand. Monthly data
from January 2003 to December 2007 were used for the analysis. Empirical
results indicated that U.S. Non-GM soybean exporters have stronger market
power than Japanese Non-GM soybean importers. The results are different
from other countries empirical studies and indicate that Japanese consumers
are willing to pay higher prices for soybeans, tofu, natto, miso, and other all
soy food products using Non-GM soybeans.