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How do GM/non GM coexistence regulations affect markets and welfare?

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  • Marion Desquilbet
  • Sylvaine Poret

Abstract

This paper presents a theoretical economic model assessing the effects of the level of mandatory genetically modified (GM) and non-GM coexistence regulations on market and welfare outcomes. We assume vertical differentiation of GM and non-GM goods on the consumer side. Producers of non-GM crops face a probability of having their harvest downgraded if gene flow from GM fields raises its content in genetically modified organisms (GMOs) above the labeling threshold. The government may impose on GMO producers mandatory ex ante isolation distances from non-GM fields in order to decrease the probability of non-GM harvest downgrading. It may also introduce an ex post compensation to non-GMO farmers for profit losses due to harvest downgrading, with a compensation fund financed by GMO producers and/or the state. Assuming endogenous crop choices and prices, we study the effects of ex ante regulation and ex post liability on four outcomes: market equilibrium, the achievement of coexistence, and both global and interest group welfare. Copyright Springer Science+Business Media New York 2014

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  • Marion Desquilbet & Sylvaine Poret, 2014. "How do GM/non GM coexistence regulations affect markets and welfare?," European Journal of Law and Economics, Springer, vol. 37(1), pages 51-82, February.
    • Handle: RePEc:kap:ejlwec:v:37:y:2014:i:1:p:51-82
    DOI: 10.1007/s10657-013-9416-x
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    Cited by:

    1. GianCarlo Moschini, 2015. "In medio stat virtus: coexistence policies for GM and non-GM production in spatial equilibrium," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 42(5), pages 851-874.
    2. Andrzej Baniak & Peter Grajzl, 2016. "Controlling Product Risks when Consumers Are Heterogeneously Overconfident: Producer Liability versus Minimum-Quality-Standard Regulation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 172(2), pages 274-304, June.
    3. Andrzej Baniak & Peter Grajzl, 2014. "Controlling Product Risks when Consumers are Heterogeneously Overconfident: Producer Liability vs. Minimum Quality Standard Regulation," CESifo Working Paper Series 5003, CESifo.

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    More about this item

    Keywords

    Genetically modified organisms; Coexistence; Identity preservation; Regulation; Liability; Vertical differentiation; Law and economics; D62; H23; K32; L15;
    All these keywords.

    JEL classification:

    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L15 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Information and Product Quality

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