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Some simple economics of GM food

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  • Dietmar Harhoff
  • Pierre Régibeau
  • Katharine Rockett

Abstract

Public opposition to the genetic engineering of food crops (GM food) has not been based solely on concern about biological risks. Economic risks have been widely cited too: the fear that the world's food supply will be concentrated in the hands of a few large firms, the fear that such firms will engage or are already engaging in anti-competitive practices, and the fear of the transfer of ownership rights over genetic resources to the private sector. Are these fears justified? We argue that the GM food industry may be on course for further consolidation, and this could be anti-competitive. In fact, policymakers face a dilemma: a stringent regulatory approval process enhances food safety, but at the cost of increasing market concentration. We argue also that the integration of seed and agri-chemical manufacturers may bias the introduction of GM traits in undesirable directions. Some business practices (such as tie-in contracts between seeds and complementary products such as herbicides) may have an exclusionary motive that warrants scrutiny on anti-competitive grounds, while some other practices (such as the use of terminator genes) appear more benign. Finally, we argue against granting patents on genes or even on gene 'functions'. Doing so may delay the development of socially beneficial applications. Copyright CEPR, CES, MSH, 2001.

Suggested Citation

  • Dietmar Harhoff & Pierre Régibeau & Katharine Rockett, 2001. "Some simple economics of GM food," Economic Policy, CEPR;CES;MSH, vol. 16(33), pages 263-299, October.
  • Handle: RePEc:bla:ecpoli:v:16:y:2001:i:33:p:263-299
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    Cited by:

    1. Andreas Fier & Dietmar Harhoff, 2002. "Die Evolution der bundesdeutschen Forschungs- und Technologiepolitik: Rückblick und Bestandsaufnahme," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 3(3), pages 279-301, August.
    2. Steve McCorriston, 2002. "Why should imperfect competition matter to agricultural economists?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(3), pages 349-371, July.
    3. Sergio H. Lence & Dermot J. Hayes, 2008. "Welfare Impacts of Cross-Country Spillovers in Agricultural Research," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 90(1), pages 197-215.
    4. Fletcher, Stanley M. & Nadolnyak, Denis A., 2005. "Biotechnology and International Competitiveness: Implications for Southern U.S. Agriculture: Discussion," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 37(02), August.
    5. Mads Greaker & Yuyu Chen, 2006. "Can voluntary product-labeling replace trade bans in the case of GMOs?," Discussion Papers 485, Statistics Norway, Research Department.
    6. Iulie Aslaksen & Bent Natvig & Inger Nordal, 2004. "Environmental risk and the precautionary principle. "Late lessons from early warnings" applied to genetically modified plants," Discussion Papers 398, Statistics Norway, Research Department.
    7. Cadot, Olivier & Suwa-Eisenmann, Akiko & Traça, Daniel, 2003. "OGM et relations commerciales transatlantiques," Cahiers d'Economie et de Sociologie Rurales (CESR), INRA (French National Institute for Agricultural Research), vol. 68.
    8. Aslaksen, Iulie & Ingeborg Myhr, Anne, 2007. ""The worth of a wildflower": Precautionary perspectives on the environmental risk of GMOs," Ecological Economics, Elsevier, vol. 60(3), pages 489-497, January.
    9. Iulie Aslaksen & Anne Ingeborg Myhr, 2006. ""The worth of a wildflower" Precautionary perspectives on the environmental risk of GMOs," Discussion Papers 476, Statistics Norway, Research Department.
    10. Sheldon, Ian M., 2008. "The Biotechnology Sector: "Bounds" to Market Structure," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6078, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Nadolnyak, Denis A. & Sheldon, Ian M., 2002. "A Model Of Development Of Agricultural Biotechnological Innovations: Patent Policy Analysis," 2002 Annual meeting, July 28-31, Long Beach, CA 19802, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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