Team:Cornell/project/hprac/economics

Economic Analysis

One major concern of our research is whether or not it will affect the consumer market. We understand the positive impact our work will have on Ecovative's product. However, if consumers are unwilling to pay for the environmentally friendly material, the company's product, along with our research, will not contribute towards a more sustainable future.

To address this issue, we researched the current disposable materials market and conducted surveys on how the genetically modified product would fit in the market. Companies that are heavily dependent on Styrofoam products are seeking an alternative because of rising costs and environmental concerns. In 2012, production companies spent an average of 61% of their income on raw polystyrene material. Environmental lobbyists have pushed for these companies to spend even more money on researching recycling options. Dart Container Company, which controls 18.8% of the Styrofoam product market, has been investing large sums of money into foam collection centers for recycling [1].

Over 200 cities have already banned the material, most of which are in California, home to 12.1% of all industry establishments [2]. Within the last year, Chicago, New York City, and the state of Massachusetts have announced plans to pass legislation limiting the use of Styrofoam products [3].

To combat rising costs and regulations, firms are increasing the prices of their products. According to a report by the Wall Street Journal, bioplastics volume is predicted to grow 30% globally over the next 10 years due to increasing demand for eco-friendly packaging, whereas the projected increase in demand for polystyrene packaging is less than 1% [4]. These changes will encourage a decrease in the price difference between Styrofoam and the genetically engineered substitute. To best understand the public opinion of genetically engineered products, we surveyed 33 average consumers on their reasoning behind their disposable material usage. Our surveys demonstrated that the majority of Styrofoam product consumers are willing to switch to an environmentally friendly substitute despite the implications of a genetically modified organism. Most of these consumers are also willing to pay on average 50% more for our material. Studies done by Ecovative on the price of their product lead us to believe that within the next 10 years, the price of Styrofoam products will equal that of the eco-friendly substitute [4]. Based on these results, we are confident that the market for our genetically engineered product will continue growing until all Styrofoam products are replaced with an environmentally friendly substitute.