In this paper I address two issues pertaining to the market differentiation between non-genetically modified (non-GM) and genetically modified (GM) food varieties. First, I provide a cost-efficiency explanation of the discrepancy between the observed shares of identity preserved non-GM variety and the total supply of the variety. Second, I show that when products can be falsely labeled as non-GM, the share of false labeling depends on the level of identity preservation. In this context, I demonstrate that the share of falsely labeled supply can increase in response to harsher fines.
Saak, Alexander E., "Identity Preservation and False Labeling in the Food Supply Chain" (2002). CARD Working Papers. 333.