Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products
We relate the labeling of genetically modified (GM) products to the theory of grading and minimum quality standards. The model represents three stages in the supply chain, assumes a vertical product differentiation framework, allows for the accidental commingling of non-GM products, and treats regulation as a purity threshold for non-GM products. We find that a non-GM purity level that is too strict leads to the disappearance of the non-GM product, and that some quality standard benefits farmers. Indeed, the standard that is optimal from the perspective of producers is stricter than what is optimal for consumers and for societal welfare.
|Date of creation:||23 Mar 2006|
|Date of revision:|
|Publication status:||Published in American Journal of Agricultural Economics, August 2007, vol. 89, pp. 769-783|
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