Regulation, Trade, and Market Power: Agricultural Chemical Markets and Incentives for Biotechnology
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Chemical companies generally support environmental regulatory segregation of Canadian and U.S. agricultural chemical markets, apparently because it enables them to practice third-order price discrimination. This study provides new cross-section evidence that suggests that price discrimination is practiced. We consider the potential implications of chemical market segregation for the innovation and adoption of biotechnologies that are linked to chemical use and chemical prices in the context of a two-sector-two-country model solved as a two-stage game. Biotechnology implications of regulatory harmonization that reintegrates the two chemical markets are then examined.
Key wordsprice discrimination agricultural chemicals biotechnology
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