This paper develops a dynamic model of the evolution of pest a population and pest resistance to characterize the socially optimal refuge strategy for managing a pest's resistance to genetically modified crops. Previous theoretical economic analyses of this problem focus on steady states; we also address refuge policies along the optimal path to the final equilibrium. To elaborate on our theoretical analysis of the resistance problem, we develop a simulation model calibrated to cotton (Gossypium spp.) production in China. Our results show the importance of fitness cost as a determinant of the qualitative nature of optimal refuge policies.