Transgenic crops offer farmers a new and effective pest control option. However, the wide spread adoption of these crops could lead to a resistant pest population. This paper demonstrates how a pest refuge can be used to maximise the value of farm income in a dynamic model with genetic foundations.

The Federal Agriculture Improvement and Reform Act (FAIR) of 1996 ended commodity specific subsidies and resulted in a significant shift in corn and soybean production in 1997. While conservation compliance improved the environmental health of the Central U.S., changes in production due to the...