U.S. versus E.U. Biotechnology Regulations and Comparative Advantage: Implications for Future Conflicts and Trade

Wednesday, April 1, 2009

In the 1990s, a new and important industry emerged; namely, the plant biotechnology industry. As the industry matured, US based firms became more dominant and their market shares increased. Although many former chemical companies in the US moved away from development of new chemicals into development of new biotechnology traits (e.g., Monsanto, followed by Pioneer/DuPont and Dow Chemical/Mycogen), European companies continued to heavily invest in chemicals well into the 21st century (e.g., Syngenta, BASF, Bayers). The different patterns of investment in R&D caused the US firms to dominate the industry, and affected the two countries' comparative advantage. Whereas the Europeans became more competitive in agricultural chemicals, the US became more competitive in biotechnology.

Gal Hochman
Gordon Rausser
David Zilberman

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