AGRICULTURAL ECONOMICS Agricultural Economics 49 (2018) 725–739 Doing well by doing good: agricultural biotechnology in the fight against hunger Konstantinos Giannakas ∗ , Amalia Yiannaka Department of Agricultural Economics, University of Nebraska-Lincoln, 217 H.C. Filley Hall, Lincoln, NE 68583-0922, USA Received 11 April 2017; received in revised form 17 March 2018; accepted 17 May 2018 Abstract A recent FAO report estimates that more than 800 million people around the world have been facing malnutrition and hunger. This article develops a simple, empirically relevant multimarket framework of heterogeneous consumers and an imperfectly competitive innovating firm to analyze the profit-maximizing strategies of innovating firms in hunger-stricken areas of the world. The analysis shows that, when the association of the GM technology with malnutrition and hunger reduction in food insecure areas of the world decreases consumer aversion to the GM technology in the rest of the world, the innovating firm can find it economically optimal to reduce its price and increase consumer access to nutritious food in these hunger-stricken areas. When the impact of hunger reduction on consumer attitudes toward the GM technology is relatively strong, the firm will find it optimal to offer its GM technology in the hunger-stricken areas for free as its losses in these areas are more than compensated by its gains in the rest of the world. This result is in contrast with the standard assumption of innovators’ desire to exercise the market power conferred by their intellectual property rights and provides some analytical support to the strategic corporate social responsibility (CSR) hypothesis. JEL classifications: L2, O3, Q16 Keywords: Malnutrition; Hunger; Innovation; Agricultural biotechnology; Genetically modified crops; Food security; Firm strategy 1. Introduction Technological innovation and the conduct of innovating firms are key weapons in the fight against hunger and the pursuit of food security around the world (Giannakas, 2014). Confer- ring significant agronomic benefits to producers and having the ability to enhance both the resistance of plants to environ- mental stresses and the quality and nutritional value of food (Klumper and Qaim, 2014), agricultural biotechnology seems uniquely equipped, if not destined, to spearhead the effort to combat malnutrition and hunger around the world. 1 This re- search will analyze the conduct of innovating firms in hunger- stricken countries, where more than 800 million people have been facing malnutrition and hunger (FAO, IFAD and WFP, 2015). Recognizing that malnutrition and hunger can be reduced through access to increased quantities of nutritious food offered ∗ Corresponding author: Tel.: (402) 472-2041; fax: (402) 472-3460. E-mail address: kgiannakas@unl.edu (K. Giannakas). 1 See Background Information on Genetically Modified Products provided as Supplementary Material. at affordable prices, 2 the objective of this article is to analyze the output/pricing strategies of innovating agrifood companies in hunger-stricken areas of the world. To effectively do so, the research develops an empirically relevant multimarket frame- work of heterogeneous consumers and an imperfectly compet- itive innovating firm that seeks to maximize profits. In partic- ular, the innovating firm is assumed to have developed a new GM technology (e.g., drought-resistant, cost-reducing, and/or quality-enhancing technology) that is embedded in a seed that sells to the world market. To analyze the profit-maximizing strategies of the innovating firm in different regions of the world, we model the innovat- ing firm’s behavior in two regions—a hunger-stricken coun- try/region (HSC) that can benefit from the GM technology, and the rest of the world (ROW) where the innovation is marketed. While the, very diverse, consumer attitudes and level of aversion to GMOs are a key (if not the key) determinant of the market potential and success of GM products in most of the world, 2 See Upton et al. (2016) for food security measurement strategies, Feleke et al. (2005) for discussion and analysis of supply versus demand causes and solutions to food insecurity, and Qaim et al. (2007) for analysis of the role biofortification can play in combating malnutrition. C  2018 International Association of Agricultural Economists DOI: 10.1111/agec.12455