EXAMINING PRICE PATHS OF A PORTFOLIO OF AGRO-BIOTECHNOLOGY SEEDS: THE EFFECTS OF COMPETITION AND FARMERS' RESPONSE

Biotechnology techniques have played an important role in meeting farmer's needs in the seed industry given the changes in customer's preferences. This paper analytically evaluates the time paths of pricing a portfolio of seeds, which simultaneously encourages seed adoption and maximizes a firm's returns within a competitive environment while considering shorter product life cycles. Using a dynamic programming (DP) approach, the results indicate that the single pricing model and the portfolio pricing model are materially affected by the firm's initial market share, the farmer's attitude towards seed attributes, and the firm competitiveness within the industry. Farmer's acceptance of a seed variety will have an impact on seed price or actions from the seed firm even though farmers are theoretically and empirically considered as price takers in the input markets.