Link between R&D intensity and market concentration: analysis of Brazilian corn and soybean seed markets

Abstract

Innovation in the Brazilian seed markets is one of the main driver of the Brazilian agricultural expansion during the last decades. However, these markets also experienced a market reconsolidation in the form of a market concentration. In this paper, we test the hypothesis that there is an inverse relationship between innovations and market structure at the seed market. We use a Generalized Method of Moments model applied to a theoretical framework that allowed us to determine the direction of this relationship. Our results suggested that this link depends on market characteristics, such as the introduction of genetically modified organisms (GMO). For corn (soybean), we find a positive (negative) relationship between these factors that has become negative (positive) in the period post-GMO introduction.