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In Medio Stat Virtus: Coexistence Policies for GM and non-GM Production in Spatial Equilibrium

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This paper develops a spatial equilibrium model suitable to analyze the economic impacts of measures (such as isolation distances and buffer zones) meant to ensure coexistence between GM and non-GM crops. We show that policies that put the cost of such measures exclusively on GM producers lead to a competitive equilibrium that is biased against GM products (relative to the welfare maximizing allocation). Efficient allocation is restored if the cost of implementing coexistence measures is shared equally between adjacent GM and non-GM farms. Key Words: Biotechnology; externality; nonconvexity; regulation; technology adoption.

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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 14-wp548.

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Date of creation: May 2014
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Handle: RePEc:ias:cpaper:14-wp548

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  1. Lapan, Harvey E. & Moschini, GianCarlo, 2004. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," Staff General Research Papers 2109, Iowa State University, Department of Economics.
  2. Volker Beckmann & Claudio Soregaroli & Justus Wesseler, 2006. "Coexistence Rules and Regulations in the European Union," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 88(5), pages 1193-1199.
  3. GianCarlo Moschini & Harun Bulut & Luigi Cembalo, 2005. "On the Segregation of Genetically Modified, Conventional and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis," Journal of Agricultural Economics, Wiley Blackwell, vol. 56(3), pages 347-372.
  4. 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).
  5. Moschini, GianCarlo, 2008. "Biotechnology and the Development of Food Markets: Retrospect and Prospects," Staff General Research Papers 12982, Iowa State University, Department of Economics.
  6. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  7. Munro, Alistair, 2008. "The spatial impact of genetically modified crops," Ecological Economics, Elsevier, vol. 67(4), pages 658-666, November.
  8. Desquilbet, Marion & Poret, Sylvaine, 2011. "How do GM / non GM coexistence regulations affect markets and welfare?," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114757, European Association of Agricultural Economists.
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