he market price of GM seeds reflects both the cost of producing the seeds and the farm
benefits from using them. For a vertically integrated biotech-seed firm to remain viable in the
long run, operating income—sales revenue less operating costs—must be sufficient to cover the
fixed costs associated with seed and trait development, marketing and promotion costs, and the
cost of financing. Meanwhile, seed prices must not exceed the farmers’ net benefit from using
the seed. Farmers have an incentive to use GM seed when it provides benefits from increased
farm productivity and reduced production cost that exceed the additional seed cost. Given the
oligopolistic structure of the biotech-seed industry, several strategies can be employed by firms
to lower their costs, extract economic benefits from farmers and seed dealers, and increase
adoption of GM seeds. The findings from o