Consumption Externalities, Information Policies, And Multiple Equilibria: Evidence For Genetically Engineered Food Markets
We provide evidence of consumption externalities for foods with genetically engineered ingredients. The probability of choosing bread made exclusively from genetically engineered wheat is significantly higher for individuals who perceive normal bread to contain higher levels of genetically engineered content. The magnitude and significance of the consumption externality depends upon the intensity and nature of individual concern about genetically engineered foods and upon prevailing information policies such as explicit warnings about potential health impacts of genetically engineered foods. The estimated preference structures result in an equilibrium level of genetically engineered ingredients that can be sensitive to the initial level of genetically engineered content in the general marketplace. We discuss possible regulatory implications of such preferences structures.
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