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Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility

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  • Beckmann, Volker
  • Soregaroli, Claudio
  • Wesseler, Justus

Abstract

The future institutional environment for the co-existence of genetically modified (GM) crops, conventional crops and organic crops in Europe combines measures of ex-ante regulation and ex-post liability rules. Against this background we ask the following two questions: How does ex-ante regulation and ex-post liability under irreversibility and uncertainty affect the adoption of GM crops? What are the implications for regional agglomeration of GM and non-GM crops? Ex-ante regulations and ex-post liabilities for using GM crops will induce additional costs. These costs are modelled in a classical way. The model is advanced by including irreversibility and uncertainty and taking into account transaction costs of negotiating possible solutions with neighbouring farmers which are assumed to be partially irreversible. The results show that the design of ex-ante regulation and ex-post liability increases the value of waiting and results in less immediate adoption of the GM technology. Additionally, the rules and regulations in the EU do provide incentives for the regional agglomeration of GM and non-GM crops that are mainly driven by the irreversibility effect of the ex-ante regulatory and ex-post liability costs.

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Bibliographic Info

Paper provided by Humboldt University Berlin, Department of Agricultural Economics in its series Institutional Change in Agriculture and Natural Resources Discussion Papers with number 18845.

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Date of creation: 2006
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Handle: RePEc:ags:huiain:18845

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Related research

Keywords: co-existence; GM crops; liability law; public regulation; technology adoption; Agricultural and Food Policy; Research and Development/Tech Change/Emerging Technologies; K13; O33; Q18;

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References

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  1. Robert Weaver & Justus Wessler, 2004. "Monopolistic pricing power for transgenic crops when technology adopters face irreversible benefits and costs," Applied Economics Letters, Taylor & Francis Journals, vol. 11(15), pages 969-973.
  2. Demont, Matty & Wesseler, Justus & Tollens, Eric, 2003. "Biodiversity versus Transgenic Sugar Beet: The One Euro Question," 2003 Annual Meeting, August 16-22, 2003, Durban, South Africa 25831, International Association of Agricultural Economists.
  3. Scatasta, Sara & Wesseler, Justus & Demont, Matty, 2005. "Irreversibility, Uncertainty and the Adoption of Transgenic Crops: the Case of BT-Maize in France," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24758, European Association of Agricultural Economists.
  4. Eggers, Jorg & Laschewski, Lutz & Schleyer, Christian, 2004. "Agri-Environmental Policy in Germany: Understanding the Role of Regional Administration," Institutional Change in Agriculture and Natural Resources Discussion Papers 18832, Humboldt University Berlin, Department of Agricultural Economics.
  5. Soregaroli, Claudio & Wesseler, Justus, 2005. "Minimum Distance Requirements and Liability: Implications for Co-Existence," MPRA Paper 33230, University Library of Munich, Germany.
  6. Conner, David S., 2003. "Pesticides and Genetic Drift: Alternative Property Rights Scenarios," Choices, Agricultural and Applied Economics Association, vol. 18(1).
  7. Beckmann, Volker & Wesseler, Justus, 2005. "Spatial Dimension Of Externalities And The Coase Theorem: Implications For Co-Existence Of Transgenic Crops," 2005 Annual meeting, July 24-27, Providence, RI 19534, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Murray, Catherine, 2005. "Social Capital and Cooperation in Central and Eastern Europe: A Theoretical Perspective," Institutional Change in Agriculture and Natural Resources Discussion Papers 18831, Humboldt University Berlin, Department of Agricultural Economics.
  9. Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2006. "Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility," Institutional Change in Agriculture and Natural Resources Discussion Papers 18845, Humboldt University Berlin, Department of Agricultural Economics.
  10. Kolstad, Charles D & Ulen, Thomas S & Johnson, Gary V, 1990. "Ex Post Liability for Harm vs. Ex Ante Safety Regulation: Substitutes or Complements?," American Economic Review, American Economic Association, vol. 80(4), pages 888-901, September.
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Citations

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Cited by:
  1. Consmuller, Nicola & Beckmann, Volker & Petrick, Martin, 2011. "Towards GMO-free landscapes? Identifying driving factors for the establishment of cooperative GMO-free zones in Germany," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114493, German Association of Agricultural Economists (GEWISOLA).
  2. Skevas, Theodoros & Wesseler, Justus & Fevereiro, Pedro, 2009. "Coping with ex-ante regulations for planting Bt maize: the Portuguese experience," MPRA Paper 25609, University Library of Munich, Germany.
  3. Falck-Zepeda, José & Kilkuwe, Enoch & Wesseler, Justus, 2008. "Introducing a genetically modified banana in Uganda: Social benefits, costs, and consumer perceptions," IFPRI discussion papers 767, International Food Policy Research Institute (IFPRI).
  4. Consmuller, Nicola & Beckmann, Volker & Petrick, Martin, 2012. "Identifying driving factors for the establishment of cooperative GMO-free zones in Germany," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126531, International Association of Agricultural Economists.
  5. Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2006. "Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility," Institutional Change in Agriculture and Natural Resources Discussion Papers 18845, Humboldt University Berlin, Department of Agricultural Economics.
  6. Kikulwe, Enoch M. & Birol, Ekin & Wesseler, Justus & Falck-Zepeda, Jose Benjamin, 2013. "Benefits, costs, and consumer perceptions of the potential introduction of a fungus-resistant banana in Uganda and policy implications," IFPRI book chapters, in: Falck-Zepeda, Jose Benjamin & Gruère, Guillaume P. & Sithole-Niang, Idah (ed.), Genetically modified crops in Africa: Economic and policy lessons from countries south of the Sahara, chapter 4, pages 99-141 International Food Policy Research Institute (IFPRI).
  7. Skevas, Theodoros & Fevereiro, P. & Wesseler, Justus, 2008. "Coping with ex ante Regulations and ex post Liability Rules for Planting Bt-maize – The Portuguese Experience," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44189, European Association of Agricultural Economists.

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