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Genetically Modified Crops: Their Market and Welfare Impacts


  • Sergio H. Lence
  • Dermot J. Hayes


A framework is developed for examining price and welfare effects of the introduction of genetically modified (GM) products. In the short run, non-GM grain generally becomes another identity-preserved product. However, more profound market effects are observed under some reasonable parameterizations. When calibrated to reflect the U.S. corn market, introducing GM technology increases aggregate welfare over a wide range of scenarios, unless the corresponding production cost savings are small and consumers are seriously concerned about GM products. The possibility that GM technology may reduce aggregate welfare is interesting because the model assumes rational agents and does not include regulatory constraints. Copyright 2005, Oxford University Press.

Suggested Citation

  • Sergio H. Lence & Dermot J. Hayes, 2005. "Genetically Modified Crops: Their Market and Welfare Impacts," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(4), pages 931-950.
  • Handle: RePEc:oup:ajagec:v:87:y:2005:i:4:p:931-950

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    References listed on IDEAS

    1. McCluskey, Jill J., 2000. "This Product May Contain GMOs," Choices, Agricultural and Applied Economics Association, vol. 15(2).
    2. Miranowski, John A. & Moschini, Giancarlo & Babcock, Bruce A. & Duffy, Michael & Wisner, Robert & Beghin, John C. & Hayes, Dermot J. & Lence, Sergio H & Baumel, C. Phillip & Harl, Neil E., 1998. "Economic Perspectives on GMO Market Segregation," ISU General Staff Papers 199801010800001297, Iowa State University, Department of Economics.
    3. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, March.
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    Cited by:

    1. GianCarlo Moschini, 2008. "Biotechnology and the development of food markets: retrospect and prospects," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 35(3), pages 331-355, September.
    2. Liu, Pengcheng & Huang, Chung-Huang & Feng, Zhongchao & Zhou, Deyi, 2009. "Consumer’s choice on GM labeling: evidences from China," 2009 Conference, August 16-22, 2009, Beijing, China 51807, International Association of Agricultural Economists.
    3. Frisvold, George & Reeves, Jeanne, 0. "Genetically Modified Crops: International Trade And Trade Policy Effects," International Journal of Food and Agricultural Economics (IJFAEC), Alanya Alaaddin Keykubat University, Department of Economics and Finance, vol. 3.
    4. Lusk, Jayson L. & Rozan, Anne, 2008. "Public Policy and Endogenous Beliefs: The Case of Genetically Modified Food," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), August.
    5. Taing, William & Ahmadi-Esfahani, Fredoun Z., 2009. "GM technology and the Australian canola," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 48191, Australian Agricultural and Resource Economics Society.
    6. Singerman, Ariel & Hart, Chad E. & Lence, Sergio H., 2012. "Revenue Protection for Organic Producers: Too Much or Too Little?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(3), December.
    7. Costanigro, Marco & Lusk, Jayson L., 2014. "The signaling effect of mandatory labels on genetically engineered food," Food Policy, Elsevier, vol. 49(P1), pages 259-267.
    8. Takeshima, Hiroyuki, 2011. "Distribution of welfare gains from GM cassava in Uganda across different population groups and market margins," African Journal of Agricultural and Resource Economics, African Association of Agricultural Economists, vol. 6(1), March.
    9. Singerman, Ariel, 2011. "Price Analysis, Risk Assessment and Insurance for Organic Crops," ISU General Staff Papers 201101010800001065, Iowa State University, Department of Economics.
    10. Johan F.M.Swinnen & Thijs Vandemoortele, 2011. "On Butterflies and Frankenstein: A Dynamic Theory of Regulation," LICOS Discussion Papers 27611, LICOS - Centre for Institutions and Economic Performance, KU Leuven.

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