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Labeling Regulations and Segregation of First- And Second-Generation Genetically Modified Products: Innovation Incentives and Welfare Effects

  • Moschini, GianCarlo
  • Lapan, Harvey E.

We review some of the most significant issues and results on the economic effects of genetically modified (GM) product innovation, with emphasis on the question of GM labeling and the need for costly segregation and identity preservation activities. The analysis is organized around an explicit model that can accommodate the features of both first-generation and second-generation GM products. The model accounts for the proprietary nature of GM innovations and for the critical role of consumer preferences vis-?-vis GM products, as well as for the impacts of segregation and identity preservation and the effects of a mandatory GM labeling regulation. We also investigate briefly a novel question in this setting, the choice of "research direction" when both cost-reducing and quality-enhancing GM innovations are feasible.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 12275.

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Date of creation: 01 Apr 2005
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Handle: RePEc:isu:genres:12275
Contact details of provider: Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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  1. José Benjamin Falck-Zepeda & Greg Traxler & Robert G. Nelson, 2000. "Surplus Distribution from the Introduction of a Biotechnology Innovation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(2), pages 360-369.
  2. Harvey E. Lapan & GianCarlo Moschini, 2002. "Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products," Center for Agricultural and Rural Development (CARD) Publications 02-wp302, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  3. Giancarlo Moschini & Harvey Lapan, 1997. "Intellectual Property Rights and the Welfare Effects of Agricultural R&D," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(4), pages 1229-1242.
  4. Huffman, Wallace E. & Shogren, Jason F. & Rousu, Matthew C. & Tegene, Abebayehu, 2003. "Consumer Willingness to Pay for Genetically Modified Food Labels in a Market with Diverse Information: Evidence from Experimental Auctions," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(03), December.
  5. Charles Noussair & StÈphane Robin & Bernard Ruffieux, 2004. "Do Consumers Really Refuse To Buy Genetically Modified Food?," Economic Journal, Royal Economic Society, vol. 114(492), pages 102-120, 01.
  6. Golan, Elise H. & Kuchler, Fred & Mitchell, Lorraine, 2000. "Economics Of Food Labeling," Agricultural Economics Reports 34069, United States Department of Agriculture, Economic Research Service.
  7. Moschini, GianCarlo & Lapan, Harvey E. & Sobolevsky, Andrei, 2000. "Roundup Ready Soybeans and Welfare Effects in the Soybean Complex," Staff General Research Papers 1799, Iowa State University, Department of Economics.
  8. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-83, December.
  9. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
  10. Mussa, Michael & Rosen, Sherwin, 1978. "Monopoly and product quality," Journal of Economic Theory, Elsevier, vol. 18(2), pages 301-317, August.
  11. Ian M. Sheldon, 2002. "Regulation of biotechnology: will we ever 'freely' trade GMOs?," European Review of Agricultural Economics, Foundation for the European Review of Agricultural Economics, vol. 29(1), pages 155-176, March.
  12. Bullock, David S. & Desquilbet, Marion & Nitsi, Elisavet I., 2000. "The Economics Of Non-Gmo Segregation And Identity Preservation," 2000 Annual meeting, July 30-August 2, Tampa, FL 21845, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  13. Crespi & Marette, 2003. "Does contain vs. "Does not contain" : does it matter which GMO label is used ?," Working Papers 155594, Institut National de la Recherche Agronomique, France.
  14. Murray Fulton & Konstantinos Giannakas, 2004. "Inserting GM Products into the Food Chain: The Market and Welfare Effects of Different Labeling and Regulatory Regimes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 86(1), pages 42-60.
  15. Carter, Colin A. & Gruere, Guillaume P., 2003. "International Approaches to the Labeling of Genetically Modified Foods," Choices, Agricultural and Applied Economics Association, vol. 18(2).
  16. Andrei Sobolevsky & GianCarlo Moschini & Harvey Lapan, 2005. "Genetically Modified Crops and Product Differentiation: Trade and Welfare Effects in the Soybean Complex," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(3), pages 621-644.
  17. W. H. Furtan & R. S. Gray & J. J. Holzman, 2003. "The Optimal Time to License a Biotech "Lemon"," Contemporary Economic Policy, Western Economic Association International, vol. 21(4), pages 433-444, October.
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