Pricing Powdery-mildew-resistant Dogwoods: Simulated Impacts on the Nursery-industry Supply Chain

The University of Tennessee developed a flowering dogwood tree (Cornus florida) that is resistant to powdery mildew (Microspaera pulchra). A simulated cooperative game was created to estimate a university fee and predict the behavior of nursery growers and nursery product retailers. The simulation suggests a university fee of $3.51, leading to an average retail price premium for the resistant tree of $10.41. At this price level the simulation predicts that 62 percent of all retail dogwood trees sold would be powdery mildew resistant. Based on 1998 sales of 1.475 million dogwood trees nationwide, 914,500 were predicted to be the powdery mildew resistant varieties, resulting in $3.2 million in revenue for the university. Given this level of sales and markup pricing, the cost of the trees will rise in subsequent stages of the distribution channel, and revenues will increase as well. The simulation suggests nursery revenue will increase by nearly $4 million and costs by $3.2 million, resulting in a net nursery gain of $0.8 million. Similar computations for the retail level are $9.5 million in revenue and a net increase of $5.5 million.

Pricing Powdery-mildew-resistant Dogwoods: Simulated Impacts on the Nursery-industry Supply Chain Academic Article