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Estimating the Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn

  • Colin A. Carter

    (Professor of Agricultural and Resource Economics at the University of California, Davis)

  • Aaron Smith

    (Associate Professor of Agricultural and Resource Economics at the University of California, Davis)

In 2000, a genetically modified corn variety called StarLink that was not approved for human consumption was discovered in the food-corn supply. To estimate the price impact of this event on the U.S. corn market, we develop the relative price of a substitute method. This method applies not only to the StarLink event but also to rare events in other markets. We find that the contamination led to a 6.8% discount in corn prices and that the suppression of prices lasted for at least a year. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Article provided by MIT Press in its journal The Review of Economics and Statistics.

Volume (Year): 89 (2007)
Issue (Month): 3 (August)
Pages: 522-533

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Handle: RePEc:tpr:restat:v:89:y:2007:i:3:p:522-533
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  14. repec:cup:cbooks:9780521855167 is not listed on IDEAS
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