Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

2010

Journal or Book Title

International Review of Economics and Finance

Volume

19

Issue

3

First Page or Article ID Number

383

Last Page

391

DOI

10.1016/j.iref.2009.04.002

Abstract

This paper investigates competition between two markets that sell close substitutes: a traditional product and a genetically modified (GM) product. Tightening an import quota on the GM product raises the prices of both goods and hurts consumers. Two scenarios are considered under free trade: Cournot–Nash equilibrium and Stackelberg equilibrium. A Stackelberg type monopolist produces more, and the competitive traditional firms produce less, than in Cournot–Nash equilibrium. In the long run, an import ban on the GM product does not help competitive producers of the genetically modified organism (GMO)-free products but benefits only the landowners in Europe.

JEL Classification

F1

Comments

NOTICE: this is the author’s version of a work that was accepted for publication in International Review of Economics and Finance. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in International Review of Economics and Finance 19 (2010), doi: 10.1016/j.iref.2009.04.002.

Copyright Owner

Elsevier Inc.

Language

en

File Format

application/pdf