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Competition with Mandatory Labeling of Genetically Modified Products

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Author Info
Linda A. Toolsema
Abstract

A vertical differentiation model is analyzed to study the placing on the market of genetically modified (GM) products in a context where labeling of such products is mandatory, as it is in the European Union. The model has two stages: firms first choose their technology (either GM or conventional) and then compete. We assume the GM product to have lower marginal cost, and lower value to consumers. We analyze technology choice as well as the effects of introducing the GM product on competitive behavior. In particular, we study implications for output levels, prices, and social welfare. We also discuss contamination of conventional goods.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 164 (2008)
Issue (Month): 3 (September)
Pages: 429-448
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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200809)164:3_429:cwmlog_2.0.tx_2-a

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Find related papers by JEL classification:
D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General

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