Why Has not Genetically Modified Wheat Been Commercialized: A Game Theoretical Perspective

In this paper, we investigate the reasons why Genetically Modified (GM) wheat has not been commercialized with a particular focus on how the leftward shifts of wheat demand affect social welfare changes. When wheat demand doesn’t change due to the introduction of GM wheat, a presumed 10% yield increase will increase U.S. wheat producers’ welfare by at least U.S.$215 million and increase all consumers’ welfare by at least U.S.$392 million. However, a leftward shift of the demand curve, by as small as 3%, could diminish welfare gains and even result in negative welfare changes for both consumers and producers. We then explore, from a game theoretical approach, the cause-and-effect relationship between the demand side and major players’ strategic reactions in the wheat market. Under certain conditions, anti-biotech special interest groups have the incentive to send messages to mislead consumers in favor of these groups’ interests. Along with the fears of losing export sales because first mover disadvantages would occur to the country which first adopts GM wheat, essential decision makers—farmers and agricultural traders— would choose not to adopt GM wheat. Yet, a united front of industries along the GM food chain, as well as a coalition of international wheat exporters would help reshape the evolution of GM wheat commercialization.