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On the Segregation of Genetically Modified, Conventional and Organic Products in European Agriculture: A Multi-market Equilibrium Analysis

  • GianCarlo Moschini
  • Harun Bulut
  • Luigi Cembalo

Evaluating the possible benefits of the introduction of genetically modified (GM) crops must address the issue of consumer resistance as well as the complex regulation that has ensued. In the European Union (EU), this regulation envisions the co-existence of GM food with conventional and quality-enhanced products, mandates the labelling and traceability of GM products and allows only a stringent adventitious presence of GM content in other products. All these elements are brought together within a partial equilibrium model of the EU agricultural food sector. The model comprises conventional, GM and organic food. Demand is modelled in a novel fashion, whereby organic and conventional products are treated as horizontally differentiated but GM products are vertically differentiated (weakly inferior) relative to conventional ones. Supply accounts explicitly for the land constraint at the sector level and for the need for additional resources to produce organic food. Model calibration and simulation allow insights into the qualitative and quantitative effects of the large-scale introduction of GM products in the EU market. We find that the introduction of GM food reduces overall EU welfare, mostly because of the associated need for costly segregation of non-GM products, but the producers of quality-enhanced products actually benefit. Copyright 2005 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Journal of Agricultural Economics.

Volume (Year): 56 (2005)
Issue (Month): 3 ()
Pages: 347-372

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Handle: RePEc:bla:jageco:v:56:y:2005:i:3:p:347-372
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  1. Bullock, David S. & Desquilbet, Marion & Nitsi, Elisavet I., 2000. "The Economics Of Non-Gmo Segregation And Identity Preservation," 2000 Annual meeting, July 30-August 2, Tampa, FL 21845, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Ian M. Sheldon, 2002. "Regulation of biotechnology: will we ever 'freely' trade GMOs?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(1), pages 155-176, March.
  3. Eric Tollens, 2004. "Biodiversity versus transgenic sugar beet: the one euro question," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 31(1), pages 1-18, March.
  4. José Benjamin Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 360-369.
  5. repec:ner:tilbur:urn:nbn:nl:ui:12-378702 is not listed on IDEAS
  6. Giancarlo Moschini & Harvey Lapan, 1997. "Intellectual Property Rights and the Welfare Effects of Agricultural R&D," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1229-1242.
  7. Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
  8. Giannakas, Konstantinos & Yiannaka, Amalia, 2003. "Agricultural Biotechnology And Organic Agriculture: National Organic Standards, Labeling And Second-Generation Of Gm Products," 2003 Annual meeting, July 27-30, Montreal, Canada 22063, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. 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.
  10. Andrei Sobolevsky & GianCarlo Moschini & Harvey Lapan, 2005. "Genetically Modified Crops and Product Differentiation: Trade and Welfare Effects in the Soybean Complex," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 621-644.
  11. Harvey E. Lapan & Giancarlo Moschini, 2004. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(3), pages 634-648.
  12. Giancarlo Moschini & Harvey Lapan & Andrei Sobolevsky, 2000. "Roundup ready� soybeans and welfare effects in the soybean complex," Agribusiness, John Wiley & Sons, Ltd., vol. 16(1), pages 33-55.
  13. Moschini, Giancarlo, 1998. "The semiflexible almost ideal demand system," European Economic Review, Elsevier, vol. 42(2), pages 349-364, February.
  14. A. Gracia & J. M. Gil & A. M. Angulo, 1998. "Spanish food demand: a dynamic approach," Applied Economics, Taylor & Francis Journals, vol. 30(10), pages 1399-1405.
  15. Matin Qaim & Greg Traxler, 2005. "Roundup Ready soybeans in Argentina: farm level and aggregate welfare effects," Agricultural Economics, International Association of Agricultural Economists, vol. 32(1), pages 73-86, 01.
  16. Noussair, C. & Robin, S. & Ruffieux, B., 2001. "Do Consumers Not Care about Biotech Foods or Do They Just Not Read the Labels?," Purdue University Economics Working Papers 1142, Purdue University, Department of Economics.
  17. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  18. Moschini, GianCarlo, 1998. "Semiflexible Almost Ideal Demand System, The," Staff General Research Papers 1193, Iowa State University, Department of Economics.
  19. Charles Noussair & StÈphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, 01.
  20. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 42-60.
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