Switching Costs in the US Seed Industry: Technology Adoption and Welfare Impact

dc.contributor.author Luo, Jinjing
dc.contributor.author Moschini, Giancarlo
dc.contributor.author Perry, Edward D.
dc.contributor.department Center for Agricultural and Rural Development
dc.date.accessioned 2023-10-16T15:20:56Z
dc.date.available 2023-10-16T15:20:56Z
dc.date.issued 2022-12
dc.description.abstract We evaluate the role of brand and technology switching costs in the US soybean seed industry using a unique dataset of actual seed purchases by about 28,000 farmers from 1996 to 2016. Using a random coefficients logit model of demand, we estimate brand and technology switching costs, characterize the distributions of buyers’ willingness to pay for seed brands and the glyphosate tolerance (GT) trait, and assess the implications of brand and technology switching costs for farmers’ welfare, technology adoption, firm profits, and firm market shares. We find that farmers are willing to pay large premiums for brand labels, and even larger premiums for the GT trait, although there is considerable heterogeneity in these values. Switching costs play an important role in the soybean seed industry. Eliminating these costs would significantly increase buyers’ welfare, reduce seed prices and firm profits, decrease adoption of the GT trait, and impact industry consolidation by expanding smaller firms’ market shares.
dc.identifier.uri https://dr.lib.iastate.edu/handle/20.500.12876/NveomXZz
dc.language.iso en
dc.relation.ispartofseries 22-WP 639
dc.subject.disciplines DegreeDisciplines::Social and Behavioral Sciences::Agricultural and Resource Economics
dc.subject.keywords Brand inertia
dc.subject.keywords Heterogeneity
dc.subject.keywords Input demand
dc.subject.keywords Mixed logit
dc.subject.keywords State dependence
dc.subject.keywords Switching Costs
dc.subject.keywords Technology adoption
dc.title Switching Costs in the US Seed Industry: Technology Adoption and Welfare Impact
dc.type Working Paper
dspace.entity.type Publication
relation.isAuthorOfPublication 875efd32-d51f-480d-8d4b-3d87da3f2678
relation.isOrgUnitOfPublication 1a6be5f1-4f64-4e48-bb66-03bbcc25c76d
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