The Market Potential of a New High-Oleic Soybean: An Ex Ante Analysis
Abstract
This paper develops a model of heterogeneous consumer preferences
to analyze the market potential of a second-generation,
genetically modified, high-oleic soybean developed at the University
of Nebraska. The paper identifies the factors that will
determine the effectiveness of the new technology and the
implications for domestic producer welfare if the new technology
were licensed exclusively to producers in the United States.
Analytical results show that the market and welfare effects of the
introduction of high-oleic soybeans are determined by the relative
prices of products utilizing the new soybeans as an input in
their production process, the distribution of consumer preferences,
and the benefits consumers perceive from the new product.
The lower the prices of products using the new soybeans
and/or the greater the value consumers place on the new product
attribute, the greater the market acceptance of the new high-oleic
soybeans, the market share of the United States in the
world market for soybeans, and the domestic producer welfare
gains from the introduction of the new technology. When the
value consumers place on the new product attribute is sufficiently
high, the introduction of high-oleic soybeans is shown to
drive the conventional soybeans out of the market, attract consumers
of substitute products, and confer considerable benefits
to all domestic soybean producers.
Citation
AgBioForum, 7(3) 2004: 101-112.