Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties

12 Pages Posted: 1 Apr 2020

Date Written: May 2002

Abstract

There exists much uncertainty about consumer attitudes toward genetically modified foods. If it happens that sufficient (insufficient) acres are planted under nonmodified seed to meet postharvest demand, then a price premium will not (will) emerge for the nonmodified varieties. A nonlinearity originates in the fact that a price premium may not be supported. This nonlinearity interacts with demand uncertainty to determine equilibrium plantings and the probability that postharvest varietal prices differ. Also, as planting approaches signals will be broadcast about the nature of postharvest demand. We show how the nonlinearity affects the types of signals that growers will prefer to receive.

Keywords: biotechnology, demand uncertainty, price premium, value of information, D120, Q110, Q160

Suggested Citation

SAAK, ALEXANDER E. and Hennessy, David, Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties (May 2002). American Journal of Agricultural Economics, Vol. 84, Issue 2, pp. 308-319, 2002, Available at SSRN: https://ssrn.com/abstract=3565353 or http://dx.doi.org/10.1111/1467-8276.00299

ALEXANDER E. SAAK (Contact Author)

Iowa State University

David Hennessy

Iowa State University

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