China is at a critical stage of transformation from traditional to modern agriculture and its agriculture and rural economic sector faces severe challenges of shortage of natural resources, environmental degradation, agricultural disasters, sluggish income growth of farmers and widening disparity between urban and rural areas. The fundamental solution to these problems lies with the advancement of agricultural science and technology.
Recent studies in the literature examining impact of government seed price intervention on adoption of Bt cotton get different results depending on the specifics of the situation analyzed. According to one study, reduction in seed prices enables farmers to buy seeds at lower prices and this can result in surge of area sown under Bt cotton. The other view holds that seed price interventions have little impact on the adoption rates rather these interventions may adversely affect firms’ incentives to innovate. Which of the two views characterize adoption of Bt cotton in India?