Title

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

Campus Units

Economics

Document Type

Article

Publication Version

Submitted Manuscript

Publication Date

8-2004

Journal or Book Title

American Journal of Agricultural Economics

Volume

86

Issue

3

First Page or Article ID Number

634

Last Page

648

DOI

10.1111/j.0002-9092.2004.00606.x

Abstract

A partial-equilibrium, two-country model is developed to analyze implications from the introduction of genetically modified (GM) products. In the model, innovators hold proprietary rights, farmers are (competitive) adopters, some consumers deem GM food to be inferior in quality to traditional food, and the mere introduction of GM crops affects the costs of non-GM food (because of costly identity preservation). Among the results derived, it is shown that, although GM innovations have the potential to improve efficiency, some groups can be made worse off. Indeed, it is even possible that the costs induced by GM innovations outweigh the efficiency gains.

JEL Classification

L65, O32, O34, Q16

Comments

This is a working paper of an article from American Journal of Agricultural Economics 86 (2004): 634, doi: 10.1111/j.0002-9092.2004.00606.x.