Corporate pricing strategies with heterogeneous adopters: the case of herbicide resistant sugar beet

摘要

In ex ante impact assessment of proprietary seed technologies, the assessor operates under scarce and imperfect data as no market has been established for the new technology and adoption has not yet taken place. Recently the scholarly literature focused on the importance of accounting for heterogeneity among potential adopters to avoid homogeneity bias in the impact estimates. In this paper we argue that incorporation of heterogeneity in the corporate pricing strategy of the innovation is needed to avoid a second bias in the welfare estimates, the pricing bias. Therefore a framework is developed which explicitly incorporates heterogeneity of proprietary seed technology valuation among adopters in both the pricing decision and the impact assessment. The results explain the tendency of innovators to engage in third degree price discrimination if the market structure discourages arbitrage. Finally the model is applied on the case study of herbicide resistant sugar beet in the EU-27.