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Competition with mandatory labeling of genetically modified products

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  • Toolsema, Linda

    (Groningen University)

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    Abstract

    In April 2004, the European Union adopted a new legislative framework for genetically modified (GM) organisms. This framework regulates the placing on the market of GM products, and demands these products to be labeled as such. We present a duopoly model with vertical differentiation and mandatory labeling, where one firm produces the conventional product. We assume the GM product to have lower marginal cost, and lower value to consumers. We analyze the effects of introducing the GM good on output, prices, and welfare. We also study contamination and costly testing of convential goods.

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    File URL: http://irs.ub.rug.nl/ppn/289322707
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    Bibliographic Info

    Paper provided by University of Groningen, Research Institute SOM (Systems, Organisations and Management) in its series Research Report with number 05C12.

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    Date of creation: 2005
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    Handle: RePEc:dgr:rugsom:05c12

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    1. Munro, Alistair, 2003. "Monopolization and the regulation of genetically modified crops: an economic model," Environment and Development Economics, Cambridge University Press, vol. 8(01), pages 167-186, February.
    2. Brock,W. & Xepapadeas,A., 2001. "Valuing biodiversity from an economic perspective : a unified economic, ecological and genetic approach," Working papers, Wisconsin Madison - Social Systems 17, Wisconsin Madison - Social Systems.
    3. Amacher, Gregory S. & Koskela, Erkki & Ollikainen, Markku, 2004. "Environmental quality competition and eco-labeling," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 284-306, March.
    4. José Benjamin Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 82(2), pages 360-369.
    5. Alistair Ulph & Lucy O'Shea, 2002. "Biodiversity and Optimal Policies Towards R&D and the Growth of Genetically Modified Crops," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 22(4), pages 505-520, August.
    6. Alexander E. Saak & David A. Hennessy, 2002. "Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 84(2), pages 308-319.
    7. Jose B. Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Rent creation and distribution from biotechnology innovations: The case of bt cotton and Herbicide-Tolerant soybeans in 1997," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 21-32.
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