Abstract

Over the past twenty years, the R&D-based agricultural biotechnology industry has exhibited cyclical behavior in consolidation. This paper provides a positive, theoretical model of endogenous R&D, in which the number of firms engaged in R&D exhibits cyclical behavior. Additional, empirically testable, behavioral characteristics of the model cycle include: the level of R&D activity is pro-cyclical, mergers and acquisitions activity and the time to discovery of the next innovation are counter-cyclical, and the duration of cyclic peaks (periods of high firm numbers) is short relative to periods of low firm numbers. The implication that the distribution of firm numbers over time is multi-modal is consistent with empirical evidence and is in contrast to studies of firm numbers in other industries. One policy implication is that anti-trust actions in agricultural biotechnology should be based on observed persistent, rather than cyclic, concentration.

Submitted: December 6, 2004 · Accepted: March 7, 2005 · Published: March 16, 2005

Recommended Citation

Oehmke, James F.; Wolf, Christopher A.; and Raper, Kellie Curry (2005) "On Cyclical Industry Evolution in Agricultural Biotechnology R&D," Journal of Agricultural & Food Industrial Organization: Vol. 3 : Iss. 2, Article 1.
Available at: http://www.bepress.com/jafio/vol3/iss2/art1