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

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  • 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.

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Bibliographic Info

Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114757.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114757

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Related research

Keywords: genetically modified organisms; coexistence; identity preservation; regulation; liability; vertical differentiation; law and economics; Marketing; Research and Development/Tech Change/Emerging Technologies;

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  9. Maria Lusser & Terri Raney & Pascal Tillie & Koen Dillen & Emilio Rodríguez Cerezo, 2013. "International workshop on socio-economic impacts of genetically modified crops co-organised by JRC-IPTS and FAO," JRC-IPTS Working Papers JRC69363, Institute for Prospective and Technological Studies, Joint Research Centre.
  10. Demont, Matty & Dillen, Koen & Daems, Wim & Sausse, Christophe & Tollens, Eric & Mathijs, Erik, 2009. "On the proportionality of EU spatial ex ante coexistence regulations," Food Policy, Elsevier, vol. 34(6), pages 508-518, December.
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  14. Bullock, D. S. & Desquilbet, M., 2002. "The economics of non-GMO segregation and identity preservation," Food Policy, Elsevier, vol. 27(1), pages 81-99, February.
  15. Michele Graziano Ceddia & Mark Bartlett & Caterina De Lucia & Charles Perrings, 2011. "On the regulation of spatial externalities: coexistence between GM and conventional crops in the EU and the ‘newcomer principle’," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 55(1), pages 126-143, 01.
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  19. Desquilbet, Marion & Bullock, David S., 2002. "Who pays the costs of non-GMO segregation and identity preservation?," 2002 International Congress, August 28-31, 2002, Zaragoza, Spain 24973, European Association of Agricultural Economists.
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Cited by:
  1. GianCarlo Moschini, 2014. "In Medio Stat Virtus: Coexistence Policies for GM and non-GM Production in Spatial Equilibrium," Center for Agricultural and Rural Development (CARD) Publications 14-wp548, Center for Agricultural and Rural Development (CARD) at Iowa State University.

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