Public debate continues over whether the United States should regulate genetically modified (GM) foods by imposing a mandatory labeling policy. This paper develops a model that shows that a voluntary GM-labeling policy results in higher welfare than a regulated mandatory GM-labeling policy, if consumers can accurately read the signals in each market. We then develop an experiment that shows consumers behave as if they can accurately identify signals for GM foods. Our model and results support the perspective that the United States has been prudent in fending off calls for regulations demanding a mandatory GM-labeling policy. Key Words: genetically modified foods, mandatory labeling, voluntary labeling, laboratory auctions, nth-price auction, vegetable oil, tortilla chips, russet potatoes
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
10047.
Length: Date of creation: 30 Oct 2002 Date of revision: Handle: RePEc:isu:genres:10047
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