How do GM / non GM coexistence regulations affect markets and welfare?
2015
Desquilbet, Marion | Poret, Sylvaine | Groupe de recherche en économie mathématique et quantitative (GREMAQ) ; Université Toulouse Capitole (UT Capitole) ; Université de Toulouse (UT)-Université de Toulouse (UT)-Institut National de la Recherche Agronomique (INRA)-École des hautes études en sciences sociales (EHESS)-Centre National de la Recherche Scientifique (CNRS) | Alimentation et sciences sociales (ALISS) ; Institut National de la Recherche Agronomique (INRA) | auto-saisine
Classification JEL : D62; H23; K32; L15 <br/>12-350
Show more [+] Less [-]English. This paper presents a theoretical economic model assessing the effects of the level ofmandatory genetically modified (GM) / non-GM coexistence regulations on market and welfareoutcomes. We assume vertical differentiation of GM and non-GM goods on the consumerside. Producers are heterogeneous in their production cost for GM crops. Producers of non-GM crops face a probability of having their harvest downgraded if gene flow from GM fieldsraises its content in GMOs (genetically modified organisms) above the labeling threshold. Thegovernment may impose on GMO producers mandatory ex ante isolation distances from non-GM fields in order to decrease the probability of non-GM harvest downgrading. It may alsointroduce 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 andex post liability of GMO producers on market equilibrium, on the achievement of coexistence,and on both global and interest group welfare.
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