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Landscape Clubs: Co-existence of GM and Organic Crops

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  • Furtan, William Hartley
  • Guzel, A.
  • Weseen, A.S.
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    Abstract

    The possibility of increased production of genetically modified (GM) crops in agriculture accentuates the need to examine the feasibility of GM and non-GM technologies coexisting on a common physical landscape. Using the theory of clubs, this paper examines the possibility of coexistence for GM and organic wheat technologies through the formation of an organic club with an endogenously determined buffer zone. Given the available data on prices, yields, and rotations, it is shown that a club can be created in which GM and organic agricultural production technologies can economically co-exist in the same physical landscape. Specifically, co-existence results in an increase in economic welfare over a situation where only GM technology is used but is not Pareto superior because producers in the buffer zone will incur injury. We show that organic producers in the club can compensate producers in the buffer zone and still be better off. Hence, the compensation principle holds.

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    Bibliographic Info

    Paper provided by European Association of Agricultural Economists in its series 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark with number 24495.

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    Date of creation: 2005
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    Handle: RePEc:ags:eaae05:24495

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    Keywords: Crop Production/Industries; D71; Q16;

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    1. Casella, Alessandra, 2001. "The Role of Market Size in the Formation of Jurisdictions," Review of Economic Studies, Wiley Blackwell, vol. 68(1), pages 83-108, January.
    2. Avinash Dixit, 2003. "Clubs with Entrapment," American Economic Review, American Economic Association, vol. 93(5), pages 1824-1829, December.
    3. Scotchmer, Suzanne, 2002. "Local public goods and clubs," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 29, pages 1997-2042 Elsevier.
    4. W. H. Furtan & R. S. Gray & J. J. Holzman, 2003. "The Optimal Time to License a Biotech "Lemon"," Contemporary Economic Policy, Western Economic Association International, vol. 21(4), pages 433-444, October.
    5. Bolton, Patrick & Roland, GĂ©rard, 1995. "The Break up of Nations: A Political Economy Analysis," CEPR Discussion Papers 1225, C.E.P.R. Discussion Papers.
    6. Cornes,Richard & Sandler,Todd, 1996. "The Theory of Externalities, Public Goods, and Club Goods," Cambridge Books, Cambridge University Press, number 9780521477185, April.
    7. Casella, Alessandra, 1992. "On Markets and Clubs: Economic and Political Integration of Regions with Unequal Productivity," American Economic Review, American Economic Association, vol. 82(2), pages 115-21, May.
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