Surplus Distribution from the Introduction of a Biotechnology Innovation

Abstract

We examine the distribution of welfare from the introduction of Bt cotton in the United States in 1996. The welfare framework explicitly recognizes that research protected by intellectual property rights generates monopoly profits, and makes it possible to partition these rents among consumers, farmers, and the innovating input firms. We calculate a total increase in world surplus of $240.3 million for 1996. Of this total, the largest share (59%) went to U.S. farmers. The gene developer, Monsanto, received the next largest share (21%), followed by U.S. consumers (9%), the rest of the world (6%), and the germplasm supplier, Delta and Pine Land Company (5%). Copyright 2000, Oxford University Press.

On Butterflies and Frankenstein: A Dynamic Theory of Regulation

“…A last example is conventional farming that uses non-GM seed versus biotechnology that applies GM seed. Using biotechnology is cheaper (Falck-Zepeda et al 2000;Lapan and Moschini 2007), but consumers have some aversion to GM products (Curtis et al 2004).…”

The GMO experience in North and South America

“…Field level studies of the performance of Bt cotton have been completed in the USA (Falck-Zepeda et al, 2000a, 2000b, 2000c, Mexico (Traxler et al, 2003), Argentina , Australia (Fitt, 2003), South Africa (Ismael et al, 2001), China , and India (Qaim and Zilberman, 2003). In all three NSAm countries, Bt cotton varieties had higher effective yields, were more profitable, and saved on pesticide expenditures.…”

“…In all three NSAm countries, Bt cotton varieties had higher effective yields, were more profitable, and saved on pesticide expenditures. Several studies have estimated the aggregate impact and the functional distribution of benefits from the introduction of transgenic varieties on benefits to producers, consumers and industry (Frisvold et al, 2000;Falck-Zepeda et al, 2000b;Price et al, 2003). These studies use estimates of the farm level cost savings and model world cotton supply and demand within an economic framework to calculate benefits.…”

Production, Identity Preservation, and Labeling in a Marketplace with Genetically Modified and Non-Genetically Modified Foods

“…Bt technology has been effective in reducing insecticide application rates dramatically in cotton in the southern United States (Falck-Zepeda et al, 2000) and in India (Qaim and Zilberman, 2003). It replaced chemical insecticides that are quite toxic to the environment and humans.…”