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Abstract
In this paper, we use a simulation model to measure the potential market and welfare effects of
recently introduced genetically modified (GM) canola in Australia. The short-run results
indicate that non-GM canola may emerge as a niche product commanding a premium. In the
long run, GM technology appears to enhance aggregate welfare. However, when production
cost savings are trivial and consumers become highly concerned about GM food products,
aggregate welfare may decline. The policy implications of the analysis are explored.