Consumption effects of genetic modification: what if consumers are right?*

This paper develops a model of differentiated consumers to examine the consumption effects of genetic modification (GM) under alternative labelling regimes and segregation enforcement scenarios. Analytical results show that if consumers perceive GM products as being different than their traditional counterparts, GM affects consumer welfare and, thus, consumption decisions. When the existence of market imperfections in one or more stages of the supply chain prevents the transmission of cost savings associated with the new technology to consumers, GM results in welfare losses for consumers. The analysis shows that the relative welfare ranking of.the 'no labelling' and 'mandatory labelling' regimes depends on: (i) the level of consumer aversion to GM products; (ii) the size of marketing and segregation costs under mandatory labelling; (iii) the share of the GM product in total production; and (iv) the extent to which GM products are incotTectly labelled as non-GM products. © 2002 Elsevier Science B.V. All rights reserved.


Issue Date:
2002-08
Publication Type:
Journal Article
DOI and Other Identifiers:
Record Identifier:
https://ageconsearch.umn.edu/record/177726
PURL Identifier:
http://purl.umn.edu/177726
Published in:
Agricultural Economics: The Journal of the International Association of Agricultural Economists, 27, 2
Page range:
97-109
Total Pages:
14
JEL Codes:
Dll; D82; LIS; Q13; Ql8




 Record created 2017-04-01, last modified 2020-10-28

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