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Innovation, Supply Chain Control, and the Welfare of Farmers

The Economics of Genetically Modified Seeds

University of Illinois at Urbana-Champaign

Genetically modified seeds offer farmers dramatic new innovations that revolutionize how they grow crops. An ever more concentrated supply industry is marketing these innovations in novel ways, using technology fees, product bundling, patent protecting contracts, and strict enforcement. Farmers face a choice between dramatic new technologies accompanied by restrictive contracts and conventional technologies readily purchased in a spot market. This article explains why there is greater concentration among seed suppliers, why new marketing arrangements are emerging, and how these conditions might make farmers better or worse off.

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