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Risks and risk premiums of GE corn: A macromarketing framework

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  • Nganje, William
  • Fosu, Prince

Abstract

It has been more than two decades since genetic engineered (GE) corn has been introduced in the United States and Spain. Despite the wide scale adoption of GE corn, (92% of planted acreage in the US in 2017), biodiversity conservation, environmental protection goals, and food safety continue to surface as potential risk factors. We developed a macromarketing framework to provide a linkage between the consumers, producers, and societal impacts of GE corn. An empirical Arbitrage Pricing Model (APT) was used to quantify risks and risk premiums associated with GE corn production. The risk premium deduced from the APT model provides a measure of intrinsic compensation for taking on higher or lower risks by participants in the marketing system. An Auto-Regressive Distributed Lag (ARDL) regression estimation of the APT model reveals that GE causes corn prices to go down due to increase supply, but significantly reduced the risk premium for producing corn in the United States. GE corn also provided environmental beneficial outcomes by reducing the use of fertilizers.

Suggested Citation

  • Nganje, William & Fosu, Prince, 2022. "Risks and risk premiums of GE corn: A macromarketing framework," Ecological Economics, Elsevier, vol. 201(C).
    • Handle: RePEc:eee:ecolec:v:201:y:2022:i:c:s0921800922002221
    DOI: 10.1016/j.ecolecon.2022.107560
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    References listed on IDEAS

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    More about this item

    Keywords

    Genetic engineered corn; Risk; Risk premium; Arbitrage pricing theory; Macromarketing system;
    All these keywords.

    JEL classification:

    • Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics

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