Strategic Labeling and Trade of GMOs
The emergence of agricultural biotechnology and the subsequent introduction of genetically modified organisms (GMOs) into the food system have been among the most controversial issues surrounding the increasingly scrutinized agri-food system. They have received considerable attention in the economics literature with the main focus being on the optimal regulatory response to products of biotechnology. This paper builds on the literature on the regulation of products of biotechnology by placing the analysis of labeling decisions in a multi-country context. Specifically, the objective of this study is to examine the effect of the strategic interdependence between countries on their regulatory responses to products of biotechnology. The paper analyzes the strategic effects of national regulatory decisions on labeling of GM products and identifies the determinants of the non-cooperative Nash equilibrium labeling regimes in a small number of producing countries that supply the world market of an agricultural product. Analytical results show that the Nash equilibrium configuration of labeling regimes in countries that have adopted the GM technology depends on (i) the distribution of consumer preferences and the level of consumer aversion to GM products; (ii) the size of the segregation and labeling costs in these countries; (iii) the relative productive efficiency and the cost effectiveness of the GM technology; (iv) the market power of the life science companies; and (v) the strength of intellectual property rights in these countries.
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Volume (Year): 4 (2006)
Issue (Month): 1 (January)
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References listed on IDEAS
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- Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
- Konstantinos Giannakas, 2002. "Infringement of Intellectual Property Rights: Causes and Consequences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 482-494.
- 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.
- Giannakas, Konstantinos & Fulton, Murray, 2002. "Consumption effects of genetic modification: what if consumers are right?," Agricultural Economics, Blackwell, vol. 27(2), pages 97-109, August.
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