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

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