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Response to an Asymmetric Demand for Attributes: An Application to the Market for Genetically Modified Crops

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  • Lence, Sergio H.
  • Hayes, Dermot J.

Abstract

A framework is developed for examining the price and welfare effects of the introduction of genetically modified (GM) crops. In the short run, non-GM grain generally becomes another niche product. However, more profound market effects are observed under some reasonable parameterizations. In the long run, consumer and producer welfare are usually greater after the introduction of GM technology. Nevertheless, in all instances some consumers and some producers lose. When identity preservation is expensive and cost savings are relatively small, both producer and consumer welfare are lower after introducing GM technology. Interestingly, this outcome is obtained even though all agents are individually rational.

Suggested Citation

  • Lence, Sergio H. & Hayes, Dermot J., 2001. "Response to an Asymmetric Demand for Attributes: An Application to the Market for Genetically Modified Crops," MATRIC Working Paper Series 18699, Iowa State University, Midwest Agribusiness Trade Research and Information Center.
    • Handle: RePEc:ags:mpaper:18699
    DOI: 10.22004/ag.econ.18699
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    References listed on IDEAS

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    1. Beghin, John C. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen P. & Tokgoz, Simla & Yu, Tun-Hsiang & Wailes, Eric J. & Chavez, Edward & Woma, 2006. "FAPRI 2006 U.S. And World Agricultural Outlook," Staff General Research Papers Archive 12597, Iowa State University, Department of Economics.
      • Beghin, John C. & Dong, Fengxia & Elobeid, Amani E. & Fabiosa, Jacinto F. & Fuller, Frank H. & Hart, Chad E. & Kovarik, Karen & Tokgoz, Simla & Yu, Tun-Hsiang (Edward) & Wailes, Eric J. & Chavez, Eddi, 2006. "FAPRI 2006 U.S. and World Agricultural Outlook," FAPRI Staff Reports 7319, Food and Agricultural Policy Research Institute (FAPRI).
    2. Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, Enero-Abr.
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    Cited by:

    1. Joe L. Parcell & Nicholas G. Kalaitzandonakes, 2004. "Do Agricultural Commodity Prices Respond to Bans against Bioengineered Crops?," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 52(2), pages 201-209, July.
    2. Desquilbet, Marion & Bullock, David S., 2003. "Who Pays The Costs Of Non-Gmo Segregation And Identity Preservation, And Who Is To Blame?," 2003 Annual meeting, July 27-30, Montreal, Canada 22011, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Diez, Maria Del Carmen Fernandez, 2005. "Welfare Measures and Mandatory Regulation for Transgenic Food in the European Union: A Theoretical Framework for the Analysis," 2005 International Congress, August 23-27, 2005, Copenhagen, Denmark 24472, European Association of Agricultural Economists.
    4. Lin, William W. & Johnson, D. Demcey, 2003. "Segregation Of Non-Biotech Corn And Soybeans: Who Bears The Cost?," 2003 Annual meeting, July 27-30, Montreal, Canada 22161, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    5. International Food Policy Research Institute, 2002. "Trade in genetically modified food: a survey of empirical studies," TMD discussion papers 106, International Food Policy Research Institute (IFPRI).
    6. Carter, Colin A. & Smith, Aaron D., 2004. "The Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," Working Papers 11997, University of California, Davis, Department of Agricultural and Resource Economics.
    7. Parcell, Joseph L. & Kalaitzandonakes, Nicholas G., 2001. "The Response Of Corn Futures Markets To Agro-Biotechnology News," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36124, Western Agricultural Economics Association.
    8. Alexander E. Saak & David A. Hennessy, 2002. "Planting Decisions and Uncertain Consumer Acceptance of Genetically Modified Crop Varieties," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 84(2), pages 308-319.
    9. Chang, Ching-Cheng & Hsu, Shih-Hsun & Wu, Chia-Hsuan, 2004. "An Economy-Wide Analysis Of Gm Food Labeling Policies In Taiwan," 2004 Annual meeting, August 1-4, Denver, CO 19929, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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