Date of Award

8-2018

Degree Type

Thesis

Degree Name

Master of Science (MS)

Department

Agricultural Economics

Committee Chair

Michael E. Wetzstein

Committee Member 1

Hazel Y. Wetzstein

Committee Member 2

Gregory J. Colson

Abstract

For policy analysis, interest is in investigating the effect of a subsidy policy-switching regime on agro-pharms investment through the theory of investment under uncertainty. It considers the probability of a policy implemented when it is not in effect and the probability of removal when it is in effect. Poisson type policy jumps models a discrete subsidy policy, which provides pharmaceutical plants financial assistance to manufacture Artemisinin-based therapies. A case study analysis determines if Artemisinin efficiency improvements can result in the development of a commercially viable U.S. agribusiness investment opportunity. Accounting for uncertainty, irreversibility, and adoption timing in establishing an Artemisinin agribusiness industry, this analysis reveals a significant impact on the decisions to invest in the industry. In order to provide cost effective antimalarial treatment, a comparison evaluates net present value criterion with the real options thresholds to discuss the optimal timing of adopting high Artemisinin genotyped Artemisia annua varieties. A real options analysis on the optimal timing of adoptions provide an outline for other potential agro-pharm endeavors.

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