<h2>ABSTRACT</h2>
<p>We provide a novel empirical analysis of the role of technology licensing, between competitors, for genetically engineered (GE) traits in the US seed industry. We extend the standard differentiated-product Bertrand pricing model to include trait licensing, which permits us to recover marginal costs and (otherwise unobserved) royalty rates. Estimation relies on a large dataset of farm-level seed purchases. We find that markups over marginal cost are sizeable, and royalties for GE traits contribute a non-trivial amount to these markups. Licensing GE traits to competitors benefits all seed sellers and, notwithstanding its strategic effect on pricing, also increases total market surplus.</p>