We review some of the most significant issues and results on the economic effects of genetically modified (GM) product innovation, with emphasis on the question of GM labeling and the need for costly segregation and identity preservation activities. The analysis is organized around an explicit model that can accommodate the features of both first-generation and second-generation GM products. The model accounts for the proprietary nature of GM innovations and for the critical role of consumer preferences vis-à-vis GM products, as well as for the impacts of segregation and identity preservation and the effects of a mandatory GM labeling regulation. We also investigate briefly a novel question in this setting, the choice of “research direction” when both cost-reducing and quality-enhancing GM innovations are feasible.
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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number
12275.
Length: Date of creation: 11 Apr 2005 Date of revision: Handle: RePEc:isu:genres:12275
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