Environmental Regulation, Market Power and Price Discrimination in the Agricultural Chemical Industry



little information on quantity or program discounts and, with very few exceptions,
respondents from Alberta provided price data only for small containers. Thus, the results
presented here are restricted to comparisons of prices for agricultural chemicals sold in
small containers (2.5 gallon jugs in the U.S. and 10 liter jugs in Canada).

Every effort was made to compare products with identical active ingredient
formulations, but nevertheless some differences in formulations did persist. Data from
the labels for each agricultural chemical indicated that the amount of active ingredient per
gallon (or ounce) of sales was different for 3 of the 13 chemicals (Amine 4, LV 6, and
Bronate Advanced). For these three chemicals, the ratios of the active ingredients in the
Canadian products to the active ingredients in the comparable U.S. products were used to
adjust the Canadian per unit of sale price (per gallon or per ounce) to an equivalent price
for a unit of the product with same amount of active ingredient as in the U.S. product.

These adjusted prices and their associated estimated standard deviations, reported
in Table 2, were used to carry out standard student T comparison of means tests for
samples of different sizes. The null hypothesis is that the price of a given chemical in
Montana is equal to the price of that chemical in Alberta. Results are presented in Table
3. These results show that for all but one of the 13 agricultural chemicals, Mirage or
Roundup Original, average prices were statistically significantly different between
northern Montana and southern Alberta. Monsanto’s Roundup products now face
extensive competition from generic glyphosates as patent rights for the product have
expired in both Canada and the United States. Most of the other products are produced
by a single chemical company and face no competition from generics.

13



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