H ORTS CIENCE 25(10):1306. 1990, Analysis of Pricing Plants Grown in Tissue Culture Wojciech J. Florkowski l , Orville M. Lindstrom 2 , Carol D. Robacker 2 , and H.R. Simonton 3 Georgia Experiment Station, Griffin, GA 30223-1797 Wholesale and retail nursery prices reflect prices of large firms (Voight, 1978). Large firms act as price leaders and small firms act as price followers. Recently, Bryan (1988) reported that large nurseries base prices on production costs, while small nurseries set prices competitively. Production costs and prices of competing plants must influence pricing of tissue cul- ture-grown plants, although only 8% of the wholesale nurseries in Florida, Texas, and California were producing such plants (Hort. Research Inst., 1987). However, little infor- mation is available about other factors that influence prices, such as strategies aimed at gaining market share, use of revenues from tissue-culture operation to subsidize other enterprises in a nursery, and demand and supply of tissue culture-grown plants. Also, the release of new plants is difficult to assess because of the secrecy preceding commercial releases and monopolistic power that new release gives a firm. This study uses cross- sectional data and multivariate regression analysis to describe factors that affect whole- sale prices of selected micropropagated plants. Price lists were requested in Spring 1987 from 36 tissue-culture firms throughout the United States identified by Goldsberry (1986), Henley (1985), and George and Sherrington (1984). Fourteen firms were located in Flor- ida, nine in California, and four or fewer each in nine other states. The rate of re- sponse was 53%; 14% were producing plants other than foliage plants and 22% were no longer operating. The price lists from 14 laboratories (10 from, Florida, and two each from Texas and California) were used in this study. Average prices for stage II (unrooted shoots), III (rooted shoots), and IV plantlets (liners) were calculated from the 1987 price lists (Table 1). A statistical model was developed to iden- tify factors that influence cultivar price; these were: 1) scale of operation as measured by total number of species/cultivars offered for sale; 2) degree of specialization as measured by the number of cultivars per species sold; Received for publication 8 Nov. 1988. The cost of publishing this paper was defrayed in part by the payment of page charges. Under postal regu- lations, this paper therefore must be hereby marked advertisement solely to indicate this fact. 1 Assistant Professor, Dept. of Agricultural Eco- nomics. 2 Assistant Professor, Dept. of Horticulture. 3 Assistant Professor, Dept. of Agricultural Engi- neering. and 3) location of the laboratory. It was hy- pothesized that the total number of plants offered for sale could lower the price be- cause of scale economies. The degree of spe- cialization increases a firm’s efficiency, thus lowering prices. A binary variable represent- ing location was included to reflect easier access of Florida firms to East Coast markets than firms in Texas or California. Estimated wholesale price equations for selected stage IV cultivars are presented in Table 2. The adjusted R 2 indicates that in- dependent variables explain > 50% of the price variability. The variable representing the scale of the operation, i.e., total number of plants produced, is significantly different from zero in two equations, but the sign is positive in one case while negative in the other. There- fore, no strong inferences can be made con- cerning the impact of the scale of operation on wholesale prices of selected microprop- agated plants. The number of cultivars of the same spe- cies is a consistently important variable in- fluencing the price. The sign is negative in all of the estimated equations, suggesting that as the degree of specialization increases the price of a cultivar decreases. This relation- ship indicates that gains from increased pro- duction efficiency are transferred to wholesale buyers. The location of a tissue culture lab- oratory did not have unidirectional impact on the price of a specific cultivar (Table 2). Further research is needed to identify other factors shaping wholesale prices of tissue culture-grown plants. Inconsistencies in the impact of some variables suggest that alter- native models should be specified and tested. Such research must be accompanied by a systematic effort to collect and record infor- mation relevant in model specification. Literature Cited Bryan, H. D., Jr. 1988. An economic analysis of the mar- keting trends of the wholesale nursery industry in Ten- nessee. MS Thesis, Dept. Agr. Econ., Univ. of Tennessee, Knoxville. George, E.F. and P.O. Sherrington. 1984. Plant propa- gation by tissue culture. Exegetics Ltd. Eversley, Bas- ingstoke Hauts, England. Goldsberry, K. 1986. Tissue culture revisited. Green- house Manager, Dec. 1986. p. 64-74. Henley, R. W. 1985. Commercial sources of tissue cul- tured plants in Florida. Foliage News 10(2)1-4. Horticultural Research Institute. 1987. Scope V of the nursery industry. Research Summary. Hort. Res. Inst. Washington, D.C. Voight, A. 1978. A guide to nursery marketing research. Hort. Res. Inst. Washington, D.C. Table 1. Average wholesale prices (free on board) for selected plants produced and sold in commercial tissue-culture laboratories. z z Packaging cost not included. y Plant name as given on price lists. x Number of microcuttings/unit depends on plant species; e.g., many foliage plants are sold as three microcuttings/ unit. w NA = Not available. *,** Significant at a = 0.05 and 0.10. Note: t ratios in parentheses. The critical t ratio value for a two-tailed test is 1.72. 1306 HORTSCIENCE, VOL. 25(10), OCOBER 1990