Incentives to Reduce Crop Trait Durability

To reduce the competition from farmers who self‐produce seed, an inbred line seed producer can switch to nondurable hybrid seed. In a two‐period framework, we first investigate the impact of crop durability on self‐production, pricing and switching decisions. Second, we study how the introduction of a fee paid by self‐producing farmers affects those decisions. We find that the monopolist may produce technologically dominated hybrid seed in order to extract more surplus from farmers. Further, the introduction of a self‐production fee improves efficiency