Innovation of Agricultural Biotechnology with Experimental Use Licensing

Abstract

Innovation in agricultural biotechnology seed products can be characterized as a non-drastic innovative process with product differentiation. We model this innovation and examine the pricing and purchase decisions for experimental use licensing. In equilibrium, a technologically advantaged firm will purchase a license, while a technologically disadvantaged firm will not. This is the case regardless of the order of pricing decisions.

Keywords

• non-drastic innovation
• product differentiation
• quality ladder