IDEAS home Printed from
MyIDEAS: Log in (now much improved!) to save this paper

Spatial Dimension Of Externalities And The Coase Theorem: Implications For Co-Existence Of Transgenic Crops

Listed author(s):
  • Beckmann, Volker
  • Wesseler, Justus

"No form of agriculture should be excluded in the EU." Many observers see this recent statement by European agricultural commissioner Franz Fischler as a clear signal towards a nearby lifting of the quasi EU moratorium on transgenic crops (or GMs for short) launched in 1998 (European Commission 2002). One of the last obstacles towards lifting the moratorium, however, is the problem of coexistence. How can GM-crops and non-GM-crops coexist? Since the European Environmental Agency published its report on "Genetically modified organisms (GMOs): The significance of gene flow through pollen transfer" (EEA 2002) the debate focuses on the external effects that GM-farmers may cause to non-GM farmer if accidental pollen transfer takes place. While strong supporters of the GM technology argue that the current legislation is sufficient to deal with this problem (e.g. EuropaBio 2003), others demand strict liability rules for GM-farmer and those who distribute GM-crops. Furthermore, elaborated monitoring systems, GM-crop cadastre and other measures should be established according to their view (e.g. Greenpeace & Zukunftsstiftung Landwirtschaft 2003). The discussion on coexistence and private liability for GM-technology, however, is not limited to Europe. There is an ongoing debate in the United States, Canada, New Zealand and other countries (see e.g. Smyth, Khachatourians and Phillips 2002; Kershen 2002; Conner 2003). Thus, the governance of the future co-existence of GM-crops, conventional crops and organic crops is becoming a burning issue. This paper examines the current debate on co-existence from the perspective of Ronald Coase´s influential paper "The Problem of Social Cost" published in 1960 (Coase 1960). Coase was very sceptical about the role of the government for resolving "harmful effects". He argued, first, that the traditional perception of the problem - making the polluter liable or taxing pollution - is misleading because it ignores the reciprocity of the problem. Second, he stated that if property rights are well defined and the costs of using the market to reallocate property rights are zero or close to zero, the allocation of resources will be independent of the initial distribution of rights. This statement became to be known as the Coase Theorem (see Cooter 1991; Posner 1993). Third, Coase noticed that if the costs of using the market to reallocate property rights are not close to zero, all institutional alternatives or governance structures must be evaluated in a comparative way, including the "costs involved in operating the various social arrangements" (Coase 1960: 44). This contribution will basically proceed in the logic of Coase´s paper but will highlight on the possible implication of the Coase-Theorem for the governance of co-existence and its implications for the spatial allocation of GM and non-GM crops. First, we characterize the problem of co-existence as a problem of social cost that can be solved institutionally as well as technically. Second, we analyze the impact of different property rights structures on the adoption of GM crops and on the value of GM and non-GM production. We will show that under certain assumptions the adoption of GM crops will be independent from the allocation of property and liability rights. In this case technical and managerial solutions may be adopted to solve the problems of co-existence. However, the values of different production systems are highly affected by the allocation of liability rights. Fourth, the implications of those for the spatial allocation of GM and non-GM farms are discussed.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL:
Download Restriction: no

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19534.

in new window

Date of creation: 2005
Handle: RePEc:ags:aaea05:19534
Contact details of provider: Postal:
555 East Wells Street, Suite 1100, Milwaukee, Wisconsin 53202

Phone: (414) 918-3190
Fax: (414) 276-3349
Web page:

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

in new window

  1. Edward Glaeser & Simon Johnson & Andrei Shleifer, 2001. "Coase Versus the Coasians," The Quarterly Journal of Economics, Oxford University Press, vol. 116(3), pages 853-899.
  2. Coase, R H, 1992. "The Institutional Structure of Production," American Economic Review, American Economic Association, vol. 82(4), pages 713-719, September.
  3. John Crespi & Stéphan Marette, 2003. "“Does Contain” vs. “Does Not Contain”: Does it Matter which GMO Label is Used?," European Journal of Law and Economics, Springer, vol. 16(3), pages 327-344, November.
  4. Jung, Chulho & Krutilla, Kerry & Kip Viscusi, W. & Boyd, Roy, 1995. "The coase theorem in rent-seeking society," International Review of Law and Economics, Elsevier, vol. 15(3), pages 259-268, September.
  5. Conner, David S., 2003. "Pesticides and Genetic Drift: Alternative Property Rights Scenarios," Choices, Agricultural and Applied Economics Association, vol. 18(1).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:ags:aaea05:19534. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (AgEcon Search)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.