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How do GM / non GM coexistence regulations affect markets and welfare?

Author

Listed:
  • Desquilbet, Marion
  • Poret, Sylvaine
Abstract
This paper presents a theoretical economic model assessing the effect of the level of mandatory genetically modified (GM) / non-GM coexistence regulations on market and welfare outcome. We assume vertical differentiation of GM and non-GM goods on the consumer side. Producers are heterogeneous in their cost savings from GMO adoption. Producers of non-GM crops face a probability of having their harvest downgraded if gene flow from GM fields makes its GMO content above the labeling threshold. The government may impose to GMO producers mandatory ex ante isolation distances from non-GM fields in order to decrease the probability of non-GM harvest downgrading. It may also introduce an ex post compensation to non-GMO farmers for profit losses due to harvest downgrading, imposing GMO farmers’ participation to a compensation fund via a tax on GM seeds. Assuming endogenous crop choices and prices, we study the effects of ex ante regulation and ex post liability of GMO producers on market equilibrium as well as on global and interest group welfare.

Suggested Citation

  • Desquilbet, Marion & Poret, Sylvaine, 2011. "How do GM / non GM coexistence regulations affect markets and welfare?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114757, European Association of Agricultural Economists.
    • Handle: RePEc:ags:eaae11:114757
    DOI: 10.22004/ag.econ.114757
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    Cited by:

    1. GianCarlo Moschini, 2015. "In medio stat virtus: coexistence policies for GM and non-GM production in spatial equilibrium," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(5), pages 851-874.
    2. Andrzej Baniak & Peter Grajzl, 2016. "Controlling Product Risks when Consumers Are Heterogeneously Overconfident: Producer Liability versus Minimum-Quality-Standard Regulation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 274-304, June.
    3. Andrzej Baniak & Peter Grajzl, 2014. "Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation," CESifo Working Paper Series 5003, CESifo.

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    More about this item

    Keywords

    Marketing; Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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