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The Economics of GM Food Labels: An Evaluation of Mandatory Labeling Proposals in India

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  • Bansal, Sangeeta
  • Ramaswami, Bharat

Abstract

Labeling of genetically modified (GM) foods is a contentious issue and internationally, there is sharp division whether such labeling ought to be mandatory. This debate has reached India where the government has proposed mandatory labeling. In this context, this paper evaluates the optimal regulatory approach to GM food labels. Mandatory labeling aims to provide greater information and correspondingly more informed consumer choice. However, even without such laws, markets have incentives to supply labeling. So can mandatory labeling achieve outcomes different from voluntary labeling? The paper shows that this is not the case in most situations. The paper goes on to explore the special set of circumstances, where mandatory labeling makes a difference to outcomes. If these outcomes are intended, mandatory labeling is justified; otherwise not.

Suggested Citation

  • Bansal, Sangeeta & Ramaswami, Bharat, 2007. "The Economics of GM Food Labels: An Evaluation of Mandatory Labeling Proposals in India," IFPRI Discussion Papers 42409, CGIAR, International Food Policy Research Institute (IFPRI).
    • Handle: RePEc:ags:iffpr5:42409
    DOI: 10.22004/ag.econ.42409
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    1. Darby, Michael R & Karni, Edi, 1973. "Free Competition and the Optimal Amount of Fraud," Journal of Law and Economics, University of Chicago Press, vol. 16(1), pages 67-88, April.
    2. 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.
    3. Kirchhoff, Stefanie & Zago, Angelo M., 2001. "A Simple Model Of Voluntary Vs Mandatory Labelling Of Gmos," 2001 Annual meeting, August 5-8, Chicago, IL 20540, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
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    2. Henseleit, Meike & Kubitzki, Sabine, 2009. "‘GMO-Free’ Labels – Enhancing Transparency or Deceiving Consumers?," 2009 Conference, August 16-22, 2009, Beijing, China 51029, International Association of Agricultural Economists.
    3. Schreiner, Julia A., 2014. "Farmers’ Valuation of Incentives to Produce GMO-free Milk: A Discrete Choice Experiment," 2014 International European Forum, February 17-21, 2014, Innsbruck-Igls, Austria 199373, International European Forum on System Dynamics and Innovation in Food Networks.
    4. Kubitzki, S. & Henseleit, M. & Herrmann, R., . "Informationsgewinn und Markttransparenz durch Labeling? – Eine kritische Würdigung der neuen Lebensmittelkennzeichnung „Ohne Gentechnik“," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 45.

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