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Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products

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Author Info
Lapan, Harvey E.
Moschini, GianCarlo

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Abstract

A partial-equilibrium, two-country model is developed to analyze implications from the introduction of genetically modified (GM) products. In the model, innovators hold proprietary rights, farmers are (competitive) adopters, some consumers deem GM food to be inferior in quality to traditional food, and the mere introduction of GM crops affects the costs of non-GM food (because of costly identity preservation). Among the results derived, it is shown that, although GM innovations have the potential to improve efficiency, some groups can be made worse off. Indeed, it is even possible that the costs induced by GM innovations outweigh the efficiency gains. Key words: biotechnology, food labeling, identity preservation, innovations, intellectual property rights, international trade, nontariff barriers, regulation.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 2109.

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Date of creation: 04 Jun 2002
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Publication status: Published in American Journal of Agricultural Economics, August 2004, Vol. 86, No. 3, pp. 634-648.
Handle: RePEc:isu:genres:2109

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
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A1 - General Economics and Teaching - - General Economics

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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. Allen, Douglas W & Lueck, Dean, 1998. "The Nature of the Farm," Journal of Law & Economics, University of Chicago Press, vol. 41(2), pages 343-86, October.
  2. Lapan, H. & Moschini, G., 2000. "Incomplete Adoption of a Superior Innovation," Staff General Research Papers 1738, Iowa State University, Department of Economics.
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  3. GianCarlo Moschini, 2001. "Economic Benefits and Costs of Biotechnology Innovations in Agriculture," Center for Agricultural and Rural Development (CARD) Publications 01-wp264, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  4. Beales, Howard & Craswell, Richard & Salop, Steven C, 1981. "The Efficient Regulation of Consumer Information," Journal of Law & Economics, University of Chicago Press, vol. 24(3), pages 491-539, December.
  5. 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.
  6. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August. [Downloadable!] (restricted)
  7. Ronald Fischer & Pablo Serra, 1998. "Standards and Protection," Documentos de Trabajo 45, Centro de Economía Aplicada, Universidad de Chile. [Downloadable!]
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  8. 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.
  9. 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. Harvey E. Lapan & GianCarlo Moschini, 2004. "Identity Preservation and Labeling of Genetically Modified Products: System Design and Enforcement Issues," Center for Agricultural and Rural Development (CARD) Publications 04-wp375, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
    Other versions:
  2. 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:
  3. Anderson, Kym & Damania, Richard & Jackson, Lee Ann, 2004. "Trade, standards, and the political economy of genetically modified food," Policy Research Working Paper Series 3395, The World Bank. [Downloadable!]
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  4. 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!]
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  5. GianCarlo Moschini & Harvey E. Lapan, 2005. "Labeling Regulations and Segregation of First- and Second-Generation Genetically Modified Products: Innovation Incentives and Welfare Effects," Center for Agricultural and Rural Development (CARD) Publications 05-wp391, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  6. Lapan, Harvey E. & Moschini, GianCarlo, 2006. "Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products," Staff General Research Papers 12553, Iowa State University, Department of Economics. [Downloadable!]
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  7. Anderson, Kym & Jackson, Lee Ann, 2004. "Implications of genetically modified food technology policies for Sub-Saharan Africa," Policy Research Working Paper Series 3411, The World Bank. [Downloadable!]
  8. 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," Center for Agricultural and Rural Development (CARD) Publications 05-wp411, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  9. repec:isu:genres:12280 is not listed on IDEAS
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