This study analyzes the economic impact of a recent gene marker innovation for seedstock selection in beef cattle. Gene markers are being developed for many beef cattle attributes; this study focused on the tenderness quality of beef using two categories: tender and tough. The study begins by describing conventional procedures for seedstock selection, the science which underlies selection by gene markers and other non-genetic procedures currently being used to improve beef tenderness. After describing the commercialization of the gene marker innovation, a stylized model of a beef supply chain is constructed. The supply chain consists of a representative consumer, a producer/processor group and a monopolist supplier of the patented technology. Welfare changes resulting from the adoption of the innovation were simulated using four sets of demand elasticity data from literatures. An important focus of this research is determining how the economic surplus from the innovation will be shared by consumers, producers and the gene marker monopolist. The consumer and gene marker monopolist benefit from the technology unless the marginal and fixed cost variables (not estimated in this study) of the monopolist, are excessively high. Producer surplus was simulated as positive with three of the four elasticity data sets. The share of surplus capture by producers is generally low relative to the gains captured by consumers and the gene marker monopolist. Comparative static analysis reveal that the benefit from the innovation varies across breeds, being higher for breeds in which the favorable form of the marker gene is more likely to be present. Despite the apparent benefits of the innovation for beef supply chain participants, reported interviews with industry scientists reveal that markers should not be viewed as a replacement for conventional selection techniques. Indeed, selecting seedstock on the basis of a small number of available markers is not likely to produce the benefits that are currently being promised by life science companies. Consequently, this study recommends that the innovation be incorporated into existing seedstock selection practices. Much more analysis is needed to understand the full economic impact of gene markers for beef tenderness and for other beef quality attributes.

This study analyzes the economic impact of a recent gene marker innovation for seedstock selection in beef cattle. Gene markers are being developed for many beef cattle attributes; this study focused on the tenderness quality of beef using two categories: tender and tough. The study begins by describing conventional procedures for seedstock selection, the science which underlies selection by gene markers and other non-genetic procedures currently being used to improve beef tenderness. After describing the commercialization of the gene marker innovation, a stylized model of a beef supply chain is constructed. The supply chain consists of a representative consumer, a producer/processor group and a monopolist supplier of the patented technology. Welfare changes resulting from the adoption of the innovation were simulated using four sets of demand elasticity data from literatures. An important focus of this research is determining how the economic surplus from the innovation will be shared by consumers, producers and the gene marker monopolist. The consumer and gene marker monopolist benefit from the technology unless the marginal and fixed cost variables (not estimated in this study) of the monopolist, are excessively high. Producer surplus was simulated as positive with three of the four elasticity data sets. The share of surplus capture by producers is generally low relative to the gains captured by consumers and the gene marker monopolist. Comparative static analysis reveal that the benefit from the innovation varies across breeds, being higher for breeds in which the favorable form of the marker gene is more likely to be present. Despite the apparent benefits of the innovation for beef supply chain participants, reported interviews with industry scientists reveal that markers should not be viewed as a replacement for conventional selection techniques. Indeed, selecting seedstock on the basis of a small number of available markers is not likely to produce the benefits that are currently being promised by life science companies. Consequently, this study recommends that the innovation be incorporated into existing seedstock selection practices. Much more analysis is needed to understand the full economic impact of gene markers for beef tenderness and for other beef quality attributes.

This study analyzes the economic impact of a recent gene marker innovation for seedstock selection in beef cattle. Gene markers are being developed for many beef cattle attributes; this study focused on the tenderness quality of beef using two categories: tender and tough. The study begins by describing conventional procedures for seedstock selection, the science which underlies selection by gene markers and other non-genetic procedures currently being used to improve beef tenderness. After describing the commercialization of the gene marker innovation, a stylized model of a beef supply chain is constructed. The supply chain consists of a representative consumer, a producer/processor group and a monopolist supplier of the patented technology. Welfare changes resulting from the adoption of the innovation were simulated using four sets of demand elasticity data from literatures. An important focus of this research is determining how the economic surplus from the innovation will be shared by consumers, producers and the gene marker monopolist. The consumer and gene marker monopolist benefit from the technology unless the marginal and fixed cost variables (not estimated in this study) of the monopolist, are excessively high. Producer surplus was simulated as positive with three of the four elasticity data sets. The share of surplus capture by producers is generally low relative to the gains captured by consumers and the gene marker monopolist. Comparative static analysis reveal that the benefit from the innovation varies across breeds, being higher for breeds in which the favorable form of the marker gene is more likely to be present. Despite the apparent benefits of the innovation for beef supply chain participants, reported interviews with industry scientists reveal that markers should not be viewed as a replacement for conventional selection techniques. Indeed, selecting seedstock on the basis of a small number of available markers is not likely to produce the benefits that are currently being promised by life science companies. Consequently, this study recommends that the innovation be incorporated into existing seedstock selection practices. Much more analysis is needed to understand the full economic impact of gene markers for beef tenderness and for other beef quality attributes. / Land and Food Systems, Faculty of / Graduate