Contemporary Economic Policy · 2003 · 32 citations · 8 references
AgricultureAgricultural EconomicsBiotechnologyEnvironmental EconomicsGenetic EngineeringTransgenic CropsApplication TimingCommercialization Of Transgenic CropsCrop Production EconomicsPlant Genetic EngineeringReal Options AnalysisRegulatory Frameworks For Transgenic CropsCommercialization PermitsFarm Decision MakingIrreversible ReactionsReal Options ApproachReal Options PricingReal Options ReasoningReal Options TheoryRegulatory Assessment Of Transgenic Crops
Genetically modified wheat is an irreversible technology that spreads in the environment, raising herbicide costs and lowering market prices for all producers. The study uses real options theory to determine the optimal licensing timing for GM wheat, addressing the lemon‑like licensing dilemma. JEL codes: Q18, D62.
Genetically modified (GM) wheat is an example of an irreversible technology that will cause environmental and market externalities. The optimal time to license this irreversible technology is examined using real options theory. Given the likely spread of the GM wheat genetics in the environment, the decision to license and adopt GM wheat will increase future herbicide costs for both adopters and nonadopters. Also, without the ability to segregate GM and non‐GM varieties, the market price of wheat is reduced for all producers. This creates a licensing dilemma due to the “lemon” characteristics of the new technology. (JEL Q18 , D62 )
8
Stochastic Methods in Economics and Finance.
Larry J. Merville, A. G. Malliaris, W. A. Brock · The Journal of Finance · 1983 · 268 citations
Engineering, Economics, Finance +14