Pricing of Herbicide-Tolerant Soybean Seeds: A Market-Structure Approach

Abstract

This article investigates the effects of supply-side factors on the pricing of soybean seeds in the United States. We discuss recent trends that have shaped the US soybean seed market. Using an econometric model, we also analyze the impacts on soybean seed prices of changes in market size, market concentration, and vertical organization (including vertical integration and biotech trait licensing). We simulate the effects of recent market changes on the pricing of different seed types. The analysis finds that increased within-market concentration tends to enhance seed price in that market. However, in a multi-market framework, the simulations show that the presence of complementarity in production and distribution mitigates these price enhancing effects.