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On the Segregation of Genetically Modified, Conventional, and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis

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Author Info
GianCarlo Moschini () (Center for Agricultural and Rural Development (CARD))
Harun Bulut
Luigi Cembalo

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Abstract

Evaluating the possible benefits of the introduction of genetically modified (GM) crops must address the issue of consumer resistance as well as the complex regulation that has ensued. In the European Union (EU) this regulation envisions the "co-existence" of GM food with conventional and quality-enhanced products, mandates the labelling and traceability of GM products, and allows only a stringent adventitious presence of GM content in other products. All these elements are brought together within a partial equilibrium model of the EU agricultural food sector. The model comprises conventional, GM and organic food. Demand is modelled in a novel fashion, whereby organic and conventional products are treated as horizontally differentiated but GM products are vertically differentiated (weakly inferior) relative to conventional ones. Supply accounts explicitly for the land constraint at the sector level and for the need for additional resources to produce organic food. Model calibration and simulation allow insights into the qualitative and quantitative effects of the large-scale introduction of GM products in the EU market. We find that the introduction of GM food reduces overall EU welfare, mostly because of the associated need for costly segregation of non-GM products, but the producers of quality-enhanced products actually benefit.

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Publisher Info
Paper provided by Center for Agricultural and Rural Development (CARD) at Iowa State University in its series Center for Agricultural and Rural Development (CARD) Publications with number 05-wp411.

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Date of creation: Oct 2005
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Handle: RePEc:ias:cpaper:05-wp411

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Keywords: biotechnology differentiated demand genetically modified crops identity preservation innovation welfare.

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Moschini, Giancarlo, 1998. "The semiflexible almost ideal demand system," European Economic Review, Elsevier, vol. 42(2), pages 349-364, February. [Downloadable!] (restricted)
  2. Gracia, A & Gil, J M & Angulo, A M, 1998. "Spanish Food Demand: A Dynamic Approach," Applied Economics, Taylor and Francis Journals, vol. 30(10), pages 1399-1405, October. [Downloadable!] (restricted)
  3. Falck-Zepeda, Jose Benjamin & Traxler, Greg & Nelson, Robert G, 2000. " Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 82(2), pages 360-69, May. [Downloadable!] (restricted)
  4. Moschini, Giancarlo & Lapan, Harvey & Sobolevsky, Andrei, 2000. "Roundup Ready Soybeans and Welfare Effects in the Soybean Complex," Staff General Research Papers 1799, Iowa State University, Department of Economics.
  5. Charles Noussair & StÈphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, 01. [Downloadable!] (restricted)
  6. Moschini, GianCarlo & Lapan, Harvey E., 2005. "Labeling Regulations and Segregation of First- and Second-Generation Genetically Modified Products: Innovation Incentives and Welfare Effects," Staff General Research Papers 12275, Iowa State University, Department of Economics. [Downloadable!]
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  7. Moschini, Giancarlo, 1998. "Semiflexible Almost Ideal Demand System, The," Staff General Research Papers 1193, Iowa State University, Department of Economics.
  8. Harvey E. Lapan & GianCarlo Moschini, 2004. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 86(3), pages 634-648, 08. [Downloadable!] (restricted)
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  9. Andrei Sobolevsky & GianCarlo Moschini & Harvey Lapan, 2005. "Genetically Modified Crops and Product Differentiation: Trade and Welfare Effects in the Soybean Complex," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 87(3), pages 621-644, 08. [Downloadable!] (restricted)
  10. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August. [Downloadable!] (restricted)
  11. Noussair, Charles & Robin, Stephane & Ruffieux, Bernard, 2002. "Do consumers not care about biotech foods or do they just not read the labels?," Economics Letters, Elsevier, vol. 75(1), pages 47-53, March. [Downloadable!] (restricted)
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  12. Eric Tollens, 2004. "Biodiversity versus transgenic sugar beet: the one euro question," European Review of Agricultural Economics, Oxford University Press for the Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 1-18, March.
  13. Moschini, GianCarlo & Lapan, Harvey, 2002. "Intellectual Property Rights and the Welfare Effects of Agricultural R & D," Staff General Research Papers 5048, Iowa State University, Department of Economics.
  14. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, American Agricultural Economics Association, vol. 86(1), pages 42-60, 02. [Downloadable!] (restricted)
  15. 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. [Downloadable!] (restricted)
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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. GianCarlo Moschini, 2008. "Biotechnology and the Development of Food Markets: Retrospect and Prospects," Center for Agricultural and Rural Development (CARD) Publications 08-wp477, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  2. GianCarlo Moschini, 2006. "Pharmaceutical and Industrial Traits in Genetically Modified Crops: Co-existence with Conventional Agriculture," Center for Agricultural and Rural Development (CARD) Publications 06-wp429, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
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