A Simple Model Of Voluntary Vs Mandatory Labelling Of Gmos
We consider the welfare impact of the mandatory and voluntary labelling to inform consumers on GMOs content in foods. With a model of vertical differentiation in competitive markets, we evaluate the effects on price equilibrium and welfare levels. We find that the mandatory labelling scheme would be optimal in those countries with more GMO-averse consumers and no-GMOs practices producers. Voluntary labelling would instead optimally be chosen in those countries where producers are using GMOs and consumers are more concerned about the costs savings resulting in this technology adoption.
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