Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products

Lapan, Harvey E.; Moschini, GianCarlo

doi:10.1111/j.0002-9092.2004.00606.x

Cited by 110 publications

(94 citation statements)

References 18 publications

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“…The final consumption level displays differentiated demand for GM and non-GM products, which is modeled as arising from preference heterogeneity. The consumer level displays the property that the GM product is a weakly inferior substitute for the non-GM products, as in Lapan and Moschini (2004).…”

Section: Thusmentioning

confidence: 99%

“…As discussed earlier, the premise is that, whereas consumers never prefer the GM product when the equivalent non-GM good is available at the same price, some consumers are willing to pay something to avoid the GM product. Thus, as in previous studies (e.g., Fulton and Giannakas, 2004;Lapan and Moschini, 2004), we model GM and non-GM products as "vertically differentiated" products. A demand specification that has proven useful in this context is the unit demand model of Mussa and Rosen (1978), where consumers' differing valuation of quality is captured by an individual taste parameter.…”

Section: Consumer Demandmentioning

confidence: 99%

“…A credible labeling and certification system, distinguishing GM from non-GM products in the marketplace, would clearly be desirable. Whether such a system should take the form of mandatory labeling of the (inferior-quality) GM products, as with the new EU regulation, is of course highly questionable (Crespi and Marette, 2003;Lapan and Moschini, 2004). The problem here is not simply one of asymmetric information (i.e., the seller has private information that may be valuable to buyers, and labeling requirements may force disclosure of such information) but the fact that the information to be disclosed to consumers needs to be "produced" through an ad hoc process.…”

Section: Introductionmentioning

confidence: 99%

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Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products

Lapan

Moschini

2007

American J Agri Economics

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In this paper we relate the economics of labeling genetically modified (GM) products to the theory of grading and minimum quality standards. The model represents three stages in the supply chain (farm production, marketing handlers, and final users) and allows explicitly for the accidental co-mingling of non-GM products at the marketing stage. Regulation takes the form of a threshold level of purity for non-GM products. The paper also presents a novel demand specification for differentiated GM and non-GM products that is particularly useful in our stochastic framework. First, we find that if the threshold purity level for non-GM products is too strict, this necessarily leads to the disappearance of non-GM product from the market. Second, we show that some quality standard is in the interest of farmers as well. Indeed, we show that the standard that is optimal from the perspective of producers is actually stricter than what is optimal for consumers and for societal welfare. We conclude with comparative statics effects that illustrate the impact of the model's parameters on market equilibrium and on the welfare-maximizing regulatory standard. Grading, Minimum Quality Standards, and the Labeling of Genetically Modified ProductsGianCarlo Moschini, Harvey E. Lapan March 2006Working Paper # 06012 Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products AbstractIn this paper we relate the economics of labeling genetically modified (GM) products to the theory of grading and minimum quality standards. The model represents three stages in the supply chain (farm production, marketing handlers, and final users) and allows explicitly for the accidental co-mingling of non-GM products at the marketing stage. Regulation takes the form of a threshold level of purity for non-GM products. The paper also presents a novel demand specification for differentiated GM and non-GM products that is particularly useful in our stochastic framework. First, we find that if the threshold purity level for non-GM products is too strict, this necessarily leads to the disappearance of non-GM product from the market. Second, weshow that some quality standard is in the interest of farmers as well. Indeed, we show that the standard that is optimal from the perspective of producers is actually stricter than what is optimal for consumers and for societal welfare. We conclude with comparative statics effects that illustrate the impact of the model's parameters on market equilibrium and on the welfaremaximizing regulatory standard.

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Section: Thusmentioning

confidence: 99%

Section: Consumer Demandmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products

Lapan

Moschini

2007

American J Agri Economics

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“…One reason behind this process is related to the different welfare effects induced by GMOs on different groups of the society (see Lapan and Moschini, 2004;Veyssiere and Giannakas, 2006;Moschini, 2008). Indeed, different GMO regulations may reflect the preferences of the various groups involved in the government decisionmaking process, like consumers, farmers, and agrochemical and seed companies.…”

Section: Introductionmentioning

confidence: 99%

GMO standards, endogenous policy and the market for information

Vigani

Olper

2013

Food Policy

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DisclaimerThe University of Gloucestershire has obtained warranties from all depositors as to their title in the material deposited and as to their right to deposit such material.The University of Gloucestershire makes no representation or warranties of commercial utility, title, or fitness for a particular purpose or any other warranty, express or implied in respect of any material deposited.The University of Gloucestershire makes no representation that the use of the materials will not infringe any patent, copyright, trademark or other property or proprietary rights.The University of Gloucestershire accepts no liability for any infringement of intellectual property rights in any material deposited but will remove such material from public view pending investigation in the event of an allegation of any such infringement. PLEASE SCROLL DOWN FOR TEXT. This is DisclaimerThe University of Gloucestershire has obtained warranties from all depositors as to their title in the material deposited and as to their right to deposit such material.The University of Gloucestershire makes no representation or warranties of commercial utility, title, or fitness for a particular purpose or any other warranty, express or implied in respect of any material deposited.The University of Gloucestershire makes no representation that the use of the materials will not infringe any patent, copyright, trademark or other property or proprietary rights.The University of Gloucestershire accepts no liability for any infringement of intellectual property rights in any material deposited but will remove such material from public view pending investigation in the event of an allegation of any such infringement. PLEASE SCROLL DOWN FOR TEXT. 1 GMO Standards, Endogenous Policy and the Market for InformationAbstract. The paper develops a composite index of GMO standards restrictiveness for 60 countries, assigning objective scores to six different regulatory dimensions. Using this index and its components, we empirically investigate the political and economic determinants of GMO regulations for 55 countries, controlling for spatial autocorrelation. Results show that many of the determinants highlighted in the theoretical literature, such as the structure of the agricultural sector and the institutional environment are important determinants of the restrictiveness of the GMO regulation. As a key result there emerges a prominent role of the market for information, showing that the structure of domestic mass media (public vs. private) is an important driver of GMO standards.

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“…For instance, while the United States (US) opposes the labeling of GM products arguing the "substantial equivalence" between the current, producer-oriented GM products and their conventional counterparts, the European Union has introduced mandatory labeling of GM products on the basis of its "precautionary principle" and the expressed consumer aversion to these products (see Sheldon (2004) for a comprehensive review of the policy debate between the EU and the US on the regulation of GMOs. On the labeling of GM products see also Caswell (1998), Runge and Jackson (2000), Crespi and Marette (2003), Fulton and Giannakas (2004), and Lapan and Moschini (2004)). …”

Section: Introductionmentioning

confidence: 99%

Strategic Labeling and Trade of GMOs

Veyssiere¹,

Giannakas²

2006

Journal of Agricultural &Amp; Food Industrial Organization

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The emergence of agricultural biotechnology and the subsequent introduction of genetically modified organisms (GMOs) into the food system have been among the most controversial issues surrounding the increasingly scrutinized agri-food system. They have received considerable attention in the economics literature with the main focus being on the optimal regulatory response to products of biotechnology. This paper builds on the literature on the regulation of products of biotechnology by placing the analysis of labeling decisions in a multi-country context. Specifically, the objective of this study is to examine the effect of the strategic interdependence between countries on their regulatory responses to products of biotechnology. The paper analyzes the strategic effects of national regulatory decisions on labeling of GM products and identifies the determinants of the non-cooperative Nash equilibrium labeling regimes in a small number of producing countries that supply the world market of an agricultural product. Analytical results show that the Nash equilibrium configuration of labeling regimes in countries that have adopted the GM technology depends on (i) the distribution of consumer preferences and the level of consumer aversion to GM products; (ii) the size of the segregation and labeling costs in these countries; (iii) the relative productive efficiency and the cost effectiveness of the GM technology; (iv) the market power of the life science companies; and (v) the strength of intellectual property rights in these countries.

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Innovation and Trade with Endogenous Market Failure: The Case of Genetically Modified Products

Cited by 110 publications

References 18 publications

Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products

Grading, Minimum Quality Standards, and the Labeling of Genetically Modified Products

GMO standards, endogenous policy and the market for information

Strategic Labeling and Trade of GMOs

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