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Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility

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  • Beckmann, Volker
  • Soregaroli, Claudio
  • Wesseler, Justus

Abstract

The future institutional environment for the co-existence of genetically modified (GM) crops, conventional crops and organic crops in Europe combines measures of ex-ante regulation and ex-post liability rules. Against this background we ask the following two questions: How does ex-ante regulation and ex-post liability under irreversibility and uncertainty affect the adoption of GM crops? What are the implications for regional agglomeration of GM and non-GM crops? Ex-ante regulations and ex-post liabilities for using GM crops will induce additional costs. These costs are modelled in a classical way. The model is advanced by including irreversibility and uncertainty and taking into account transaction costs of negotiating possible solutions with neighbouring farmers which are assumed to be partially irreversible. The results show that the design of ex-ante regulation and ex-post liability increases the value of waiting and results in less immediate adoption of the GM technology. Additionally, the rules and regulations in the EU do provide incentives for the regional agglomeration of GM and non-GM crops that are mainly driven by the irreversibility effect of the ex-ante regulatory and ex-post liability costs.

Suggested Citation

  • Beckmann, Volker & Soregaroli, Claudio & Wesseler, Justus, 2006. "Governing the Co-existence of GM Crops: Ex-Ante Regulation and Ex-Post Liability under Uncertainty and Irreversibility," Institutional Change in Agriculture and Natural Resources Discussion Papers 18845, Humboldt University Berlin, Department of Agricultural Economics.
    • Handle: RePEc:ags:huiain:18845
    DOI: 10.22004/ag.econ.18845
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    Cited by:

    1. Kikulwe, Enoch M. & Birol, Ekin & Wesseler, Justus & Falck-Zepeda, Jose Benjamin, 2013. "Benefits, costs, and consumer perceptions of the potential introduction of a fungus-resistant banana in Uganda and policy implications," IFPRI book chapters, in: Falck-Zepeda, Jose Benjamin & Gruère, Guillaume P. & Sithole-Niang, Idah (ed.), Genetically modified crops in Africa: Economic and policy lessons from countries south of the Sahara, chapter 4, pages 99-141, International Food Policy Research Institute (IFPRI).
    2. Consmuller, Nicola & Beckmann, Volker & Petrick, Martin, 2012. "Identifying driving factors for the establishment of cooperative GMO-free zones in Germany," 2012 Conference, August 18-24, 2012, Foz do Iguacu, Brazil 126531, International Association of Agricultural Economists.
    3. Nicholas Kalaitzandonakes & Alexandre Magnier, 2016. "Special Issue on GMO Coexistence," EuroChoices, The Agricultural Economics Society, vol. 15(1), pages 64-68, April.
    4. Maciejczak, Mariusz, 2015. "Will the institution of coexistence be re-defined by TTIP?," GMCC-15: Seventh GMCC, November 17-20, 2015, Amsterdam, the Netherlands 211478, International Conference on Coexistence between Genetically Modified (GM) and non-GM based Agricultural Supply Chains (GMCC).
    5. Skevas, Theodoros & Wesseler, Justus & Fevereiro, Pedro, 2009. "Coping with ex-ante regulations for planting Bt maize: the Portuguese experience," MPRA Paper 25609, University Library of Munich, Germany.
    6. Falck-Zepeda, José & Kilkuwe, Enoch & Wesseler, Justus, 2008. "Introducing a genetically modified banana in Uganda: Social benefits, costs, and consumer perceptions," IFPRI discussion papers 767, International Food Policy Research Institute (IFPRI).
    7. Skevas, Theodoros & Fevereiro, P. & Wesseler, Justus, 2008. "Coping with ex ante Regulations and ex post Liability Rules for Planting Bt-maize – The Portuguese Experience," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 44189, European Association of Agricultural Economists.
    8. Consmuller, Nicola & Beckmann, Volker & Petrick, Martin, 2011. "Towards GMO-free landscapes? Identifying driving factors for the establishment of cooperative GMO-free zones in Germany," 51st Annual Conference, Halle, Germany, September 28-30, 2011 114493, German Association of Agricultural Economists (GEWISOLA).

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