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The Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn

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  • Carter, Colin A.
  • Smith, Aaron D.

Abstract

Genetic modification of crops has revolutionized food production, but it remains controversial due to food safety concerns. A recent food safety scare provides a natural experiment on the market's willingness to accept an increase in perceived risk from genetically modified (GM) food. We analyze the market impact of contamination of the U.S. food-corn supply by a GM variety called StarLink. We find that the contamination led to a 6.8 percent discount in corn prices and that the suppression of prices lasted for at least a year.

Suggested Citation

  • Carter, Colin A. & Smith, Aaron D., 2004. "The Market Effect of a Food Scare: The Case of Genetically Modified StarLink Corn," Working Papers 11997, University of California, Davis, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:ucdavw:11997
    DOI: 10.22004/ag.econ.11997
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    2. David Ubilava, 2012. "El Niño, La Niña, and world coffee price dynamics," Agricultural Economics, International Association of Agricultural Economists, vol. 43(1), pages 17-26, January.
    3. Ubilava, David & Helmers, Claes Gustav, 2011. "The ENSO Impact on Predicting World Cocoa Prices," 2011 Annual Meeting, July 24-26, 2011, Pittsburgh, Pennsylvania 103528, Agricultural and Applied Economics Association.
    4. Almánzar, Miguel & Torero, Máximo & Grebmer, Klaus von, 2013. "Futures Commodities Prices and Media Coverage," Discussion Papers 149414, University of Bonn, Center for Development Research (ZEF).
    5. Magnier, Alexandre & Konduru, Srinivasa & Kalaitzandonakes, Nicholas G., 2009. "Market and Welfare Effects of Trade Disruptions from Unapproved Biotech Crops," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49592, Agricultural and Applied Economics Association.
    6. Zhen, Chen, 2009. "Long-Run Effects From Consumer Reaction To The Spread Of Foodborne Pathogens: The Case Of E. Coli Contamination Of Beef At Jack In The Box Restaurants," 2009 Conference, August 16-22, 2009, Beijing, China 51341, International Association of Agricultural Economists.
    7. Wyn Morgan & John Cotter & Kevin Dowd, 2012. "Extreme Measures of Agricultural Financial Risk," Journal of Agricultural Economics, Wiley Blackwell, vol. 63(1), pages 65-82, February.
    8. Detre, Joshua D. & Gunderson, Michael A., 2011. "The Triple Bottom Line: What is the Impact on the Returns to Agribusiness?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 14(4), pages 1-14, November.
    9. Resende Filho, Moises de Andrade & Buhr, Brian L., 2006. "Economic Evidence of Willingness to Pay for the National Animal Identification System in the US," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25342, International Association of Agricultural Economists.

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