substitutes for the GMV pest-control effect and, as it becomes more effective, pesticide use decreases. Since B0 -1 > B, the replacement of a traditional variety by its GM version leads to reduction of pesticide use, and introduction of a generic GMV reduces pesticides even further, xl0 > xlm > Xg.

1.2 Impacts of key parameters on output given pesticides are used|(5,- = l,x* > oj.

Changes in price affect output through their impact on pesticides use, while changes in yp,N, and affect output both directly and through the changes in xj. All these impacts are presented below:

(a) An increase in output price will increase output. This marginal dy._ y?D(NQE°EhXi dp P(EfjDEhI+EM!1)

response is —- =-——— ' . This result is obtained by

differentiation of (1) with respect to price yielding dyi 0 dD »m dh dxj , . ^D dD(Nt)x , ,

— = -yr-—NB;—r—-. Introducing E? = 1 and other dp 1 dNj ldxj dp s * dxD(N{)

definitions to yields the shorter formula. dp

(b) An increase in pesticides price will reduce output. The marginal reduction is -

(c) An increase in potential output will increase output supply. The dy DWtKE*, marginal increase is—^- = 1 -D(N:) + —rr=:—-ht—- Increases in

potential output may lead to a direct increase of 1 - D units of output and an additional increase because of the increase in pesticide use.

(d) An increase in the pest population will reduce output when EM,h >Eh,. This condition is likely to be met under the realistic situations

that at the optimal solution, the marginal productivity of the pesticides is very low (in absolute terms) and declining. This condition results from the marginal response of output supply to an increase of the pest population,

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