WHAT IS THE VALUE OF BT CORN?

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Hurley, Terrance M. ; Mitchell, Paul D. ; Rice, Marlin E. (2001)
  • Subject: Crop Production/Industries,

A common perception is that the value of Bt corn arises from two components-Bt corn increases expected profit and reduces profit variability. This perception encourages farmers and the policy makers to add a risk benefit to estimates of the value of Bt corn to account for the variability reduction. However, a conceptual model generates a useful decomposition of the value of Bt corn and a condition determining the impact of Bt corn on profit variability. An empirical model finds that Bt corn increases profit variability and thus decreases the value of Bt corn by 10-25% depending on risk preferences.
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