How do GM / non GM coexistence regulations affect markets and welfare?
2012
Desquilbet , Marion (INRA , Auzeville (France). UMR 1291 Groupe de Recherche en Economie Mathématique et Quantitative) | Poret , Sylvaine (INRA , Ivry-Sur-Seine (France). UR 1303 Alimentation et Sciences Sociales)
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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